A. DELIVERY OF GOODS
Any delivery of goods (defined as a "supply") within Swiss territory by a taxpayer, if made for a consideration, is a taxable transaction, unless otherwise determined by the VAT legislation. A supply of goods exists when there is a transfer of the right and power to use the goods from an economic point of view in one's own name.
Supply is a "catch all" term and includes leasing arrangements, subcontracting and the transfer, to their legal owner, of goods which have been handled by a third party. This latter category covers such activities as inspection, control and analysis. Where these transactions occur in Switzerland and between Swiss residents, any overlap in interpretation between the delivery of goods and the delivery of services should not create any difficulties. In cross-border situations, it is perhaps too early to exclude the possibility that overlapping definitions may give rise to issues of double taxation, even though this seems unlikely.
B. SUPPLY OF SERVICES
Any supply, which is not a supply of goods, if made for a consideration, is deemed to be a supply of services. Further, any supply of services is taxable unless it is included in the list of exempt services.
Taxable supplies of services include the transfer of intangible assets or rights, whether or not they are officially documented. The obligation to abstain from carrying out an action or to allow any action is also deemed to be a service. Thus, consideration received under the terms of a non-competition agreement or in respect of its discontinuation would be taxable. Further, services rendered in accordance with a legal obligation, rather than based on a contract between private parties, are in principle also considered to be taxable supplies. For instance, work performed under instructions from a bankruptcy court would be taxable.
C. IMPORTS OF GOODS
The importing of goods into Switzerland is, in principle, subject to VAT. There are some exceptions, for example where the value of the goods imported gives rise to a VAT liability of less than SFrs. 5. The importing of legal tender, human organs, blood, artist's own works of art and goods cleared for export are also exempt supplies.
D. IMPORTS OF SERVICES
Supplies of services provided by a foreign supplier have to be declared by the Swiss recipient if they are used in Switzerland. If the recipient is not liable to VAT on its commercial activity (because for example that activity is exempt from VAT) this declaration is only required if the annual amount of such services is higher than SFrs. 10,000.
E. SELF-SUPPLIES
Self-supplies are taxable transactions in two situations. One occurs where the taxpayer withdraws goods from the normal course of trade: whether for private use, reallocation to exempt activities, free donations (other than low-value gifts and samples) or on the discontinuance of VAT registration. The other situation is that of a building company or general contractor selling or leasing land or buildings after they have been constructed or improved, as those transfers will generally be exempt.
In contrast, for services, a private use of a supply of services is not considered as a taxable self-supply.
The content of this article is intended to provide general information on the subject matter. It is therefore not a substitute for specialist advice.
Deloitte & Touche Experta - Geneva, Yvon de Coulon and Per Prod'hom, Telephone (+41 22) 788 02 46 / Facsimile (+41 22) 788 03 16.
