ARTICLE
11 September 2024

Swiss Tax Alert | Swiss VAT Refund Procedure - Changes As Of 1 January 2025

Based on published finalized version of the Swiss VAT ordinance, entering into force as of 1 January 2025, the Swiss Federal Tax Administration (SFTA) has published its draft guidance...
Switzerland Tax

Based on published finalized version of the Swiss VAT ordinance, entering into force as of 1 January 2025, the Swiss Federal Tax Administration (SFTA) has published its draft guidance on the revised refund procedure for non-established/non-registered foreign VAT payers.

Background

  • Already under the VAT law currently in force in Switzerland and Liechtenstein, foreign non-established companies are entitled to recover Swiss input VAT incurred in the course of their entrepreneurial activities via refund procedure. The applicability of the refund procedure is linked to certain conditions, whereby one of the more challenging conditions was to provide the SFTA with the original invoice document in the course of the application.
  • As the wider economy is evolving towards an era with fully electronically processed business communications, including e-invoicing, businesses are increasingly challenged by the requirement to store and file original invoice documents, if such documents were originally issued in a physical paper form. A scan and re-print of an original hardcopy invoice would not be considered as original from a Swiss VAT perspective. This requirement is particularly contradicting the generally low formal requirements in the Swiss VAT law regarding invoice requirements and input VAT proofing documents.
  • In the course of the revision of the Swiss VAT Act and Ordinance, entering into force as of 1 January 2025, the requirement to file the original invoice together with the refund request will be abolished.

As of 1 January 2025, a Swiss VAT refund may be considered if the following conditions are met

  • The applying business must have its seat abroad, i.e. outside Switzerland and Liechtenstein (limitations apply to economic special zones).
  • The applying business is not liable to register for VAT purposes in Switzerland or Liechtenstein.
  • The applying business does not perform any supplies with their place of supply in Switzerland or Liechtenstein or remains lawfully not registered for Swiss VAT purposes (exceptions apply in case of VAT exempt services).
  • The applying business proves its entrepreneurial status for the refund period via confirmation of the tax administration in the country of establishment. The elements of the confirmation may vary depending on whether the country of establishment provides a reciprocal right and has a VAT system in place.
  • The refunded input VAT amount must be corrected pro-rata if the applying business renders VAT-exempt supplies or conducts non-entrepreneurial (e.g. private use of company cars) activities related to the purchased supplies that were subject to Swiss VAT. A correction must also be applied in case the applying business receives subsidies or comparable considerations

The refund procedure is not applicable in the following scenarios

  • If the applying business does not conduct entrepreneurial activities or only VAT-exempt businesses or if an input VAT refund is requested on non-entrepreneurial expenses.
  • If local VAT was charged erroneously and the supply should be zero-rated or VAT-exempt.
  • If the total amount of VAT refunded is less than CHF 500 per refund period (i.e. calendar year).

From a procedural perspective, the following considerations are key

  • Refund requests related to Liechtenstein must be filed with the Liechtenstein tax administration.
  • The refund request must be filed until 30 June (postage stamp) of the following calendar year and no extension is possible. Only one application per refund period is possible.
  • The invoices must include all formal elements as per art. 26 para. 2 VAT Act, however, no original invoice is required anymore.
  • The invoices must be addressed to the applying business, i.e. not to an employee of the applicant and input VAT on cashier receipts or similar is not refundable.
  • Applying businesses must appoint a Swiss fiscal representative to submit the refund request.

Originally published 11 September, 2024

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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