RSM Switzerland
Languages

Languages

Information on the Mail Order Scheme as of 1 January 2019

With the partial revision of the Value Added Tax Act, foreign companies operating in the mail order business are to be treated on an equal footing with companies domiciled in Switzerland.

The current unequal treatment results from the fact that no VAT is levied on imports of goods (import tax) if the tax amount is five francs or less (so-called small consignments).

The buyer of the goods can therefore purchase small consignments from abroad without VAT, whereas the same consignment is subject to domestic tax when purchased from a domestic shipping agent or retailer registered in the VAT register.

From 1 January 2019, the following shall apply in principle: If a (domestic or foreign) mail- order company generates at least CHF 100,000 per year in sales from small consignments that it transports or dispatches from abroad to Switzerland, its deliveries are regarded as domestic deliveries. It then becomes taxable in Switzerland and must be entered in the VAT register. From the date of entry in the VAT register, not only are the mail-order company's small consignments regarded as domestic deliveries, but also all other consignments for which the import tax amount is more than CHF 5. As a result, all domestic shipments of a taxable mail-order company are subject to domestic tax. Domestic tax is therefore due both on small consignments and on consignments subject to import tax. However, no import tax is levied on small consignments.

The taxable mail-order vendor can therefore deduct the import tax (he is considered to be the importer) and all other input tax due within the scope of his business activity and the activity that entitles him to deduct input tax from the tax liability from the beginning of the tax liability. The package must be clearly and unambiguously marked so that it is clear whether the import tax must be invoiced to the mail-order company or the recipient. The name and VAT number of the mail-order company must be stated on the address label. In addition, the parcel must be accompanied by a VAT-compliant invoice. The declarant must know the name, address and VAT number of the mail-order company. The mail order company must send this information to the customs declarant with the VAT-compliant invoice or a pro forma invoice to the buyer.

Anyone who achieves a turnover of at least CHF 100,000 from small consignments in 2018 and it can be assumed that such deliveries will also be carried out in the twelve months following 1 January 2019 is liable to tax from 1 January 2019 and must be entered in the VAT register. If a mail-order company commences its activities in connection with Switzerland after 1 January 2019, its transport and dispatch deliveries are deemed to have been made in Switzerland as soon as it reaches the annual turnover limit of CHF 100,000 with such small consignments. He must then be entered in the VAT register. If a domestic or foreign company is entered in the VAT register on the basis of other domestic services and this company also provides transport or dispatch deliveries with small consignments from abroad to Switzerland, these small consignments continue to be foreign sales (except for companies with an approved "foreign declaration of subordination"; see above). For this company, too, deliveries only become domestic deliveries when the limit of CHF 100,000 per year is reached for such deliveries (small consignment for this company, too, deliveries only become domestic deliveries when the limit of CHF 100,000 per year is reached for such deliveries (small consignments).

By means of the "foreign subordination declaration", mail order companies can voluntarily subordinate themselves to the tax liability before reaching the turnover limit relevant for the tax liability or before the mail order regulation comes into force. This makes it easier for them to plan the changeover. In this procedure, the mail-order company (registered in the VAT register) is regarded as the importer and can also claim import tax as input tax. The delivery to the domestic buyer is subsequently regarded as a domestic delivery.

If a domestic or foreign mail order company meets the requirements for tax liability, it must register independently with the FTA. The foreign mail-order company must have a tax representative with a place of residence or business in Switzerland. In addition, a guarantee must be provided in the form of an unlimited joint and several guarantees from a bank domiciled in Switzerland or a cash deposit. On its website, the FTA provides a list of companies registered as mail-order companies in the VAT register.

Authors

Daniel Spitz
Partner Tax

How can we help you?

Contact us by phone +41 43 488 5100 (Zurich) or +41  22 888 5050 (Geneva) or submit your questions, comments, or proposal requests.

Email us