Switzerland’s e-commerce market is on track to hit US$13.37 billion in revenue in 2024, showing how quickly online shopping is expanding. However, with this growth comes new business responsibilities, especially when managing taxes.
To stay ahead of the curve, Switzerland is introducing significant changes to the Value-Added Tax (VAT) laws, starting January 1, 2025. These new rules, confirmed by the Swiss Federal Council, introduce a range of new obligations for e-commerce platforms that facilitate transactions between buyers and sellers.
This shift in regulation primarily focuses on the concept of "deemed supplier", meaning platforms will now bear greater responsibility for collecting and reporting VAT. Here’s an overview of the most significant points businesses and platforms need to understand.
What’s Changing in 2025?
The revision to the VAT law introduces the "deemed supplier" concept for electronic platforms that facilitate sales of goods. Platforms will now have a recurring yearly obligation to disclose information to the Swiss Federal Tax Administration (SFTA), if certain thresholds are met, even if the platform’s activities do not fall entirely within the current VAT framework. Here are the key changes:
1. Deemed Supplier Concept
Under the new rules, any e-commerce platform that facilitates sales will be treated as a "deemed supplier". This means the platform itself will be responsible for collecting and paying Swiss VAT on the transactions, even if it doesn’t own the goods or services sold.
Here's what the platform will need to do:
- Collect VAT on goods sold that are already in Switzerland or imported into the country.
- Handle VAT on goods valued over CHF 100,000 in low-value consignments imported into Switzerland.
This applies to all types of transactions on the platform, including B2C (business-to-consumer), B2B (business-to-business), and even C2C (consumer-to-consumer), as long as the goods are located in or being shipped to Switzerland.
In short, platforms will now take on more responsibility for VAT compliance, regardless of whether they own the products being sold.
2. New Reporting Requirements
Platforms will now have some new reporting responsibilities under the draft guidelines. If a platform makes over CHF 1 million in annual sales through its site, it will need to electronically report the details of the transactions it handles. Here’s what platforms need to do:
- Keep a record of all transactions in Switzerland, ensuring the Swiss Federal Tax Administration (SFTA) has clear visibility into taxable activities.
- Submit an annual report on any transactions over CHF 50,000 from each supplier using the platform.
Even platforms that are already registered for VAT will need to comply with additional rules. These include stricter invoicing and documentation requirements during audits, ensuring platforms remain fully transparent about their operations.
3. Platforms as VAT Collectors
The deemed supplier concept places the VAT collection burden on platforms, even if they are simply facilitating the sale between a seller and a buyer. In this case:
- Platforms will be responsible for VAT collection when goods are either in free circulation in Switzerland or imported into the country.
- The platform will also need to ensure that the correct VAT is collected on all transactions, even if the seller is the importer of record.
The SFTA has clarified that Swiss VAT must be collected by the platform when the goods exceed CHF 100,000 in low-value consignments imported into Switzerland.
4. No Swiss Fiscal Representative for Foreign Platforms
Foreign platforms will not be required to appoint a Swiss fiscal representative. However, they must maintain a Swiss address for audit purposes, ensuring they remain accessible to Swiss authorities. If platforms do not comply with these rules, the SFTA will maintain a public list of non-compliant platforms, and further punitive measures may be imposed.
Implications for Platforms and Underlying Sellers
The new VAT obligations place considerable responsibility on e-commerce platforms. To comply with the new regulations, platforms will need to:
- Implement new systems for VAT reporting and invoicing to meet the requirements of the SFTA.
- Collaborate closely with underlying sellers to ensure VAT obligations are correctly distributed.
- Ensure that all transactions, whether local or cross-border, meet Swiss VAT requirements. This includes revising contracts, managing import licenses, and maintaining proper documentation.
Additionally, underlying sellers will also need to adjust their practices, especially in coordinating with platforms on VAT reporting, ensuring accurate data is available for audits, and determining the role of the importer for cross-border goods.
Next Steps for Businesses and Platforms
- Take a close look at your business model and how goods move through your platform to see if you fall under the "deemed supplier" rules.
- Update your systems as needed, whether that means tweaking your ERP software or making sure your website and invoicing align with the new VAT regulations.
- Communicate clearly with your sellers, making sure contracts are updated so everyone knows who’s responsible for VAT collection and reporting.
- Keep an eye on the latest updates from the SFTA, as these rules could still change before they officially take effect.
Conclusion
Switzerland’s new VAT rules bring significant changes for e-commerce platforms, particularly through the "deemed supplier" concept and stricter reporting requirements. These rules make platforms more responsible for collecting VAT on goods and services sold, whether from Swiss or foreign sellers. It's crucial for platforms to adapt quickly to avoid compliance issues and penalties.
SIGTAX helps businesses navigate these changes by offering services like VAT registration, setting up compliant invoicing systems, and managing new reporting obligations. With our support, platforms can easily meet VAT requirements and focus on growing their business without worrying about regulatory hurdles.
Add new comment