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COVID-19 update - Indirect tax, Switzerland

Covid-19 is disrupting business across the world requiring tax authorities to implement rules and reliefs to support businesses through this period. We are pulling our global indirect tax resources together to create a single source of information, support and thought leadership.

In Switzerland, COVID-19 is massively hitting the economy and the Swiss Federal and Cantonal authorities have taken a wide range of urgent provisions to mitigate the consequences of the unpredictable situation. Measures have been implemented to support Swiss businesses and employees or self-employed people, and RSM Switzerland is pleased to provide you with a summary of the key provisions for VAT and customs duties.

What type of business is this information relevant for?

All businesses that operate in Switzerland.

VAT/GST reliefs – tax authority announcements

What VAT rate changes have been announced in Switzerland?

No VAT rate changes have been announced. The VAT rates of 7.7% (normal rate), 3.7% (special rate for accommodation services) and 2.5% (reduced rate) remain unchanged. The tax authorities recommend that companies which adapt their business model following the COVID-19 crisis, check the VAT rates (e.g. a restaurant which has started offering take-out services) and examine whether the supplies they provide are excluded from the tax field.

Can tax payers delay paying VAT liabilities in Switzerland?

The deadline for paying tax may be extended by three months after the deadline has passed. This procedure can be done free of charge and without justification in the portal of federal tax authorities. A special request, must be filed either by means of the contact form on the tax authorities website, or by sending the request by post to the federal tax authorities for the payment to be extended by more than three months.

Can tax payers defer paying import VAT and duty in Switzerland?

The government has issued a special ordinance on the temporary waiver of default interest in the event of a late payment on VAT and customs duties. In addition, an ordinary procedure provided by the VAT act can be applied to defer paying import VAT. This procedure is subject to authorisation. 

Will late payment interests be due in case of delay in paying VAT liabilities or customs duty?

No default interest is due from 20 March 2020 until 31 December 2020 in the event of a late payment of VAT and customs duties. It should be understood by this provision that the rate of default interest amounts to 0% between 20 March 2020 and 31 December 2020. This zero rate applies during this period for all VAT claims that are filed before 20 March 2020.

Can tax payers defer submitting VAT returns in Switzerland?

The deadline for submitting the tax statement and payment may be extended by three months after the deadline has elapsed. This procedure can be done free of charge and without justification in the portal of federal tax authorities. If a deadline of more than three months is needed, it is necessary to file a special request, either by using the contact form on the federal authorities website, or by sending the request by post to the federal tax authorities.

Will the Swiss tax authorities refund claims?

The tax authorities continue to refund VAT claims as usual. However, a request for the early refund of VAT can be made. The tax authorities will immediately examine the request and will ensure that both this examination and the payment of the tax credit are carried out quickly.

Is there any deferred payments available for open assessments or penalties in Switzerland?

If a VAT statement is not submitted within the deadline (or within the deadline allowed), the tax authorities will send reminders and charges by way of an estimate. The taxable persons who break the VAT law can be fined. No specific rules have been introduced except for the rules mentioned above.

What ideas have you generated to support businesses?

Liquidity and cost reduction – steps businesses can take to more effectively manage VAT accounting and cashflow:

  • The e-invoicing is now available.
  • The VAT shall be reported based on the agreed consideration. In this case the VAT is payable at the issuance of the invoice and the input VAT is claimable at the reception of the invoice. However, the tax authorities may allow the taxable person on application to report on the basis of the consideration collected under specific conditions. In this case the VAT is payable once the invoice is paid by the customer and the input VAT is claimable once the invoice received is settled.
  • Bad debt relief – in case of losses on accounts receivable, the taxable turnover declared to the VAT administration can be reduced and therefore the businesses can claim the recovery of VAT paid to the tax authorities where their customers have not paid the invoiced amount.
  • The turnover tax debt is incurred on invoicing - with the issue of a partial invoice or with the collection of the partial payment or with the collection of the consideration on advance payments for supplies not exempt from the tax and for supplies without invoice;

Workforce dynamic – the impact and opportunity created by home working:

  • Businesses can claim VAT amounts on expenses reimbursed to employees working at home as long as these are business related expenses

Supply and demand shock – business model changes around supply arrangements, inventory management, new routes to market, migration to online trading, new revenue sources:

  • If businesses require to cancel events they can claim back the VAT charged to participants if they proceed to reimburse and reduce their turnover declared in the VAT returns.
  • If inventory needs to be destroyed (because it becomes obsolete, or it perishes, or for some other reason) this be done without creating a deemed disposal for VAT purposes.
  • If customers cancel contracts and this triggers a penalty clause due by the customer, penalty/compensation payments may be considered as non-taxable turnover, neutral for input VAT recovery for the supplier.
  • If customers cancel contracts and forfeit any advanced payments these can be treated as VAT free on the basis that nothing has been supplied. Any VAT that might already have been accounted for can be claimed back from the tax authority if the taxable turnover is consequently reduced in the VAT return.
  • There have been no specific changes to the rules concerning non-established taxpayers registered.

Call to action

What actions should Swiss businesses leaders be taking?

The Swiss government has implemented specific measures for businesses in the context of COVID-19. The actions to take depend on the business sector concerned, it might be necessary to seek for specific advice depending on the activity sector.

The Swiss government communicates regularly on the evolution of the situation in Switzerland and intends to gradually ease the measures introduced. It is recommended to consult official communications channels of the government for the latest information. Please see below:

State Secretariat for Economic Affairs website on COVID

Swiss Federal Tax Administration website on COVID measures for VAT and customs duty

RSM Switzerland update on measures introduced at the federal and the cantonal levels

For more support please contact:

Weronika Ludwiczak
Senior Tax Manager
RSM Switzerland SA
Genève, Lausanne, Sion, Zürich
Chemin du Faubourg-de-Cruseilles 11, 1227 Carouge/Geneva, Switzerland
DL:+41 22 888 50 39 | E: [email protected] | W: www.rsmch.ch

Daniel Spitz
Certified Tax Expert, Lic. Iur.
Partner, Head of tax Switzerland
RSM Switzerland SA
Genève, Lausanne, Sion, Zürich
Charmettes 7, 1003 Lausanne, Switzerland
DL:+41 21 311 00 53 | E:[email protected]| W:www.rsmch.ch
Mobile: +41 79 709 66 49|

AUTHOR

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Weronika Ludwiczak                                                                       
Tax Manager
E: [email protected]