Switzerland: new VAT system will be effective on January 1

400Switzerland's value-added tax regime will change from January 1, 2018, including to level the playing field for domestic companies compared with their online, overseas rivals.

Currently, foreign companies providing services in Switzerland do not have to pay VAT on Swiss turnover up to a CHF100,000 threshold. In this way, it led to competitive disadvantages for Swiss businesses, especially in the border regions.

Under the changes, a company's global turnover will be taken into account when calculating its liability to VAT. Companies with a global turnover of at least CHF100,000 will be liable to VAT from the first franc of turnover in Switzerland.

The system is to be delayed until January 1, 2019, for mail-order companies, on the grounds that Swiss Posts needs more time to implement the technical provisions of the new law. From 2019, mail-order companies will be liable to VAT if their annual turnover from import-tax-free small consignments is at least CHF100,000. These companies will be required to bill customers for VAT; customers will no longer have to pay the taxes and fees levied by Customs upon importation.

Although VAT in Switzerland is decreasing from 8% to 7.7% on January 1, a short lead time will be necessary to pass this on to passengers, said the Public Transport Industry Association.  

Train prices in Switzerland are thus set to go in the opposite direction to most countries. In Germany, tickets rose by around 2% in December. Passengers in Britain will pay 3.4% more from January 2, the largest increase for five years.


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