Handbook for Investors. Business location in Switzerland.

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10.5.2 Taxable supplies VAT is levied on the following types of services: 1. delivery of goods in Switzerland (including Liechtenstein); 2) supply of services in Switzerland (including Liechtenstein); 3) purchase of services (and certain goods deliveries in Switzerland) from enterprises with their registered office in another country if the value of goods or services exceeds CHF 10,000 per year; and 4) import of goods. Certain services provided to foreign recipients (as well as the export of goods and the delivery of goods abroad) are not taxed or are zero-rated with full input tax recovery. The delivery of goods for the purposes of VAT is not limited to goods deliveries as defined by Swiss commercial law. The VAT law provides for a number of business transactions (such as the maintenance of machinery, rental or lease of goods, trade in electricity, etc.) that are deemed to be supplies of goods for VAT purposes. 10.5.3 Taxable amount The basis for the calculation of the taxable amount for the supply of goods and services is the agreed upon or the collected gross remuneration (in cash or in kind). Input tax, i.e., the tax paid on purchases of goods and services, can be deducted. Consequently, only the value added is taxed (net all-phase principle). 10.5.4 Tax rates The standard rate is 7.6 % (8 % from January 1, 2011) on every taxable supply of goods or services. A reduced rate of 3.6 % (3.8 % from January 1, 2011) is applicable to accommodations. A reduced rate of 2.4 % (2.5 % from January 1, 2011) applies to certain categories of goods and services for certain basic needs such as water supply, food and non-alcoholic beverages, cattle, poultry, fish, cereals and grain, books and newspapers, services of non-commercial radio and TV broadcasters, etc. The Federal Tax Administration offers further simplified VAT accounting for small businesses with turnover of below CHF 5 million and a tax liability of CHF 100,000 or less per year. These small businesses may opt to submit VAT based on a balanced tax rate which is lower than the standard rate of 7.6 %, if they, in return, waive the standard procedure for input VAT accounting, which would otherwise be deducted from the VAT levied on turnover (input VAT deduction). This simplified taxation method must be maintained for at least one year, and VAT returns need to be filed twice a year only – in contrast to the standard declarations filed quarterly. 10.5.5 Exemptions The law differentiates between VAT-exempt and VAT-excluded turnover from VAT. No VAT is levied in either case, but a distinction is made regarding the input VAT deduction. In cases of exclusions, there is no input tax deduction possible for the taxes paid in generating the turnover excluded from VAT. Excluded activities are the healthcare sector, education, culture, sport, social care, most banking and insurance activities, rental and sale of real estate, as well as gambling and lotteries. For most of these categories, however, the taxpayer may opt for taxation voluntarily, except in the case of banking and insurance turnover. In contrast to activities excluded from VAT, exempt activities allow for an input VAT deduction for all taxes paid in generating the turnover in question (true exemption). An example of an activity exempt from tax is the export of goods (see also section 10.5.7). Business activities abroad are not subject to VAT. These types of turnover are generally the result of international business models. A typical example is a Swiss trading company that buys products from a foreign manufacturing company and sells them to customers in a third country, shipping the products directly to those customers. Activities involving the supply of goods or services abroad entitle the taxpayer to deduct input tax, provided the turnover does not qualify as excluded turnover. 10.5.6 Deduction of input taxes An enterprise registered for VAT is liable for VAT on all supplies (output tax) and will incur VAT on purchases for the business (input tax). In most cases, input taxes may be deducted from the amount of output taxes due and so do not generally represent an additional burden for a business. VAT is a genuine expense only for the end-consumer or for a business involved in transactions for which no input tax can be recovered (businesses with excluded income such as banks and insurance companies). 98 Handbook for Investors 2010
10.5.7 Exports In addition to exported goods, certain services – if rendered to a recipient domiciled abroad – are also VAT exempt (with credit). However, the Swiss VAT law includes a list of services that are either taxable where the service provider is domiciled or are subject to special provisions according to the list (e.g., services in connection with real estate, hotel and restaurant services; services in relation to culture, sport and the arts; passenger transport; etc.). Services not included in this list that are provided to a foreign recipient are not subject to Swiss VAT (a catch-all provision – the «place of supply is where the recipient is established» is applied). 10.5.9 Non-resident enterprises Foreign businesses supplying goods or certain services to or within Switzerland wishing to waive the exemption from tax liability or with corresponding sales revenues in excess of the threshold stated in Section 10.5.1 are generally required to appoint an authorized VAT representative based in Switzerland. Such entrepreneurs may claim input VAT directly. Non-resident entrepreneurs without taxable activities in Switzerland are entitled to a refund of Swiss VAT if their foreign activities would qualify as taxable turnover under Swiss VAT law and if the country of residence grants reciprocal treatment to Swiss entrepreneurs. However, the VAT exempt nature of such services has to be proven by the underlying documents such as invoices, agreements, etc. Under all circumstances, it is very important that the documentation be issued in compliance with the requirements according to the Swiss VAT law. The same applies to export shipments, where a customs export certificate is required for tax exemption. 10.5.8 International business activity The basic VAT rules described above have the following effect in the case of a Swiss trading company that buys products from a foreign manufacturing company and sells them to customers in a third country, shipping the products directly to those customers: Fig. 49: International business activity DE * CH * IT 10.6 Other taxes. 10.6.1 Stamp taxes Generally, the tax liability arises on special legal transactions such as the issuance of shares (issuance stamp tax also known as capital duty) or the trading of securities (securities transfer stamp tax). The tax on the issuance and the increase of equity of Swiss corporations is 1 % on the fair market value of the amount contributed, with an exemption on the first CHF 1 million of capital paid in, whether it is made in an initial or subsequent contribution. Issuance stamp tax is further levied in respect of some debt instruments such as bonds and money market papers at a rate of 0.06 % or 0.12 % on the nominal value of such instruments for each year or part thereof till maturity of such instrument. Special rules apply for instruments that run for less than a year. Carrier Invoice Delivery of goods * Foreign sales not subject to Swiss VAT The transfer of Swiss and foreign securities in which a Swiss securities dealer participates as a contracting party or as an intermediary is subject to Swiss securities transfer stamp tax (often called «securities turnover tax»). Depending on the issuer’s residence (Switzerland or foreign country), the tax rate is 0.15 % or 0.3 % and is calculated on the consideration of the securities traded. Handbook for Investors 2010 99
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Handbook for Investors. Business lo
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Welcome. Dear Reader, By choosing t
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Table of contents. Advantages offer
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10.3.4 Cross-border commuters .....
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9. Excellent educational institutio
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1.2 Climate. Switzerland’s climat
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1.7.2 Direct investments and Swiss
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1.8 Switzerland in figures. Fig. 7:
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Fig. 9: Industry structure, percent
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2.2.2 Direct investments In additio
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The medical technology industry is
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Dachorganisation Informatik- und Te
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3. Economic framework. Free competi
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Customs information www.zoll.admin.
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Swiss Federal Institute of Intellec
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In the main, Swiss product liabilit
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3.5.2 Environment Swiss environment
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4.2 Political and economic cooperat
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4.3 The euro. Even though the offic
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The following criteria are crucial
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Liability Minimum capital Consultin
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Sole proprietorship and general par
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