Two VAT rules changes in Switzerland

Two VAT rules changes in Switzerland

Changes to Switzerland's value-added tax rules will come into effect from January 1, 2015, through changes to the Value-Added Tax Ordinance.

In changes approved in November current year, foreign companies will be obliged to register and account for VAT on supplies made in Switzerland if their turnover in Switzerland makes at least CHF100,000 (USD103,600). This change refers to foreign companies that carry out work in the construction and construction-related sector in Switzerland, and is aimed to level the playing field for domestic companies.

The rule, contained in Cassis motion (12.4197), will apply until the Value Added Tax Act is amended. The amendment to the Act would target domestic and foreign companies to tax from the first franc of turnover in Switzerland if their worldwide turnover makes more than CHF100,000, and the rules will be applied to a broader range of business sectors.

A second change deletes Article 16, paragraph 3 of the Value Added Tax Ordinance, which excludes group taxation for occupational benefits schemes. This provision was included in the Ordinance since joint and several liability among group members for the VAT owed was non-compliant to occupational benefits provision law, and in particular the requirement that the assets of occupational benefits schemes must be beyond the reach of third parties. However, the Federal Supreme Court ruled that the categorical exclusion was illegal. With the deletion, occupational benefits schemes will no longer be excluded from group taxation as a matter of principle.

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