Most Swiss companies must register for VAT purposes, especially if their business purpose is to conduct commercial activities in Switzerland. However, it is important to note that in Switzerland companies must also use a UID number; therefore it is important to know what the main differences are between the VAT number and the UID number in Switzerland and the purposed of each of them.
VAT number in Switzerland
Businesses are viable to pay VAT in Switzerland regardless of their legal form. If the annual value of taxable supplies is less than 100,000 CHF or 150,000 for charitable and non-profit institutions and associations, the business is exempt from VAT.
Certain goods and services supplied in Switzerland (for example medical services) are not a subject of VAT, as well as goods and services that are supplied outside of Switzerland. Thus, anyone that provides services exempt from VAT does not need to pay this tax.
Any type of business or company that meets the requirements to pay VAT must register with the Federal Tax Administration within 30 days of the date on which tax liability begins. In the case of newly registered companies in Switzerland, depending on their business purpose, they also must register for VAT.
The standard VAT rate of 8% applies to most goods and services supplied in Switzerland. Overnight stays at hotels and other accommodation units benefit from a special VAT rate of 3.8%. In addition, a reduced VAT rate of 2.5% applies to certain goods, such as food, non – alcoholic beverages, newspapers, books, magazines, medicine and tickets to cultural and sports events.
The VAT number in Switzerland is based on the Swiss Business Identification Number and is usually known as MwST (the German abbreviation used for VAT).
UID number in Switzerland
The UID number is the Business Identification Number used in Switzerland (Unternehmens-Identifikationsnummer). This number enables all companies to identify themselves for all contacts, including administrative units and the administration. The UID number enables easy data exchange between the Swiss administration and the business community.
Because Swiss companies used various identification numbers, the data from many administrative processes couldn’t be used in a coordinated manner. Often, there were duplications which determined and unnecessary burden on both companies and administrative units. As a result, the Federal Statistical Office established a uniform mean of identification for companies within the framework of the “Uniform Business Identifier”. The process of data updating is performed in only one register, which significantly reduced the administrative burden.
The Swiss Commercial Register and the VAT register have been using the UID number starting with 2014. The UID number was also integrated at each of the 90 AHV compensation funds since 2016. The same situation applies for the Federal Customs Administration. It is mandatory for Swiss companies to provide the UID number whenever they import or export goods. This number has been increasingly used to identify companies in the private sector as well and many Swiss companies have added the UID number to their customer bases.
Entities that are required to register for a UID number are the following:
- Legal entities that are registered in the Swiss Commercial Register;
- Legal entities that are a subject to VAT;
- Self-employed individuals;
- Individuals registered in a cantonal lawyer register;
- Simple partnerships;
- Foreign companies that have a registered office in Switzerland;
- Public administration units;
- Public law institutions;
Each type of enterprise receives a unique UID number, but the establishments of which an enterprise is composed don’t receive their own identification number.
The UID register is kept by the Federal Statistical Office as a central database and it is used specifically to identify businesses and companies. The data contained by the register is limited only to the minimum necessary required for identification. Information on the enterprises included in the UID register can be accessed by the Swiss administration, by the entities registered or, to some extent, by the public.
Data that is accessible to the public includes the name and address of the entity and information on whether the respective entity is registered with the Swiss Commercial Registry or with the VAT register.
Additional information that is used to identify entities included in the UID register more accurately is not available to the public. This includes information on the economic activity, the legal form of the entity and language used for correspondence. It is also possible to register alternative addresses that are only available for the administration.