When importing goods into Switzerland, Swiss SMEs must pay value-added tax (VAT).
In Switzerland, VAT on imports is collected by the Swiss Federal Customs Administration (FCA). Taxation on the importation of goods is primarily aimed at preventing companies importing goods from overseas from being taxed less than companies purchasing goods in Switzerland.
The VAT rate currently in force
The VAT levied on imports is the same as that levied on the domestic market. The rate has been 7.7% since January 1, 2018, compared to 8% previously. This new rate is due to the removal at the end of 2017 of the additional levy used to fund disability insurance through VAT (0.4 percentage points). At the same time, VAT has seen an increase of 0.1 percentage points for the financing and overhaul of railway infrastructure. A reduced rate of 2.5% is applied to certain goods such as foodstuffs, non-alcoholic drinks, medicines and newspapers and magazines.
When goods are imported into Switzerland, VAT is in principle calculated on the basis of the invoicing price of the goods and all costs accumulated up to the place of destination in Switzerland. Proof of the value of the goods must be submitted to the customs office at the time of importation (invoice, contract of sale, etc.). Conversely, foreign VAT is not taken into account, provided that it is indicated on the invoice or the contract of sale by the supplier.
Exemption from VAT
The importing of a certain number of goods is not liable to VAT. These include goods imported in small quantities, of low value or on which minimal tax is levied, some works of art, goods exempt from customs duties and goods exempt under international treaties. The goods in question are listed in Art. 53 of the VAT Law (LTVA).
Deduction of VAT on import
In Switzerland, a company generating a global annual turnover of CHF 100,000 or more must register on the register of taxpayers of the Swiss Federal Customs Administration (FCA). It must decide whether it wishes to establish its breakdown using net tax debt rates or the method of the actual rate (for net tax debt rates, there is a turnover limit). Usually, the actual rate method is chosen, in which the breakdown is established quarterly.
Companies that have decided to use this method can deduct from their breakdown the VAT on import paid to the FCA. They do, however, need to satisfy the following conditions:
- The importer has in its possession the FCA’s VAT taxation decision or the electronic taxation decision (DTe) drawn up in the name and address of the taxpayer (the importer).
- It is effectively the importer and it is therefore entitled, as soon as the importation is complete, to financially dispose of the goods, which it may prove in the corresponding way (for example, with a contract of sale: using a purchase invoice correctly entered into the accounts).