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The SFTA has recently published a draft new chapter (para. 9.14 ff.) dedicated to e-sports in VAT Info 24 "Sport". This text predates the consultation with the advisory body and may therefore still change. For the first time, it sets out a structured approach to how e-sports competitions are treated for VAT purposes and how the place of supply is determined, depending on whether tournaments are held online, on site or in a hybrid format.
1. Esports: not a “sports event” within the meaning of the Swiss VAT Act
To qualify for VAT exemption, a sporting event must be based on sustained physical effort provided by the human body, enhancing physical performance, health or well-being (art. 21 para. 2 no. 15 VAT Act). E-sports competitions, which take place in a virtual environment and are mainly driven by intellectual effort and coordination, do not meet this definition, even when held in front of a live audience.
Video game tournaments are therefore classified as e-sports events and cannot be treated as exempt sporting events. Conversely, the mere use of an electronic device does not by itself turn an event into e-sports: where physical activity remains central to the event (e.g. a stationary bike linked to a screen), the exemption still applies.
2. Tournament income: taxable supplies of services
Ticket sales, entry fees and prize money paid to players are treated as consideration for taxable supplies of services, provided the supply is deemed to take place in Switzerland. E-sports players may become liable to Swiss VAT once their prize income reaches the registration threshold set out in art. 10 para. 2 VAT Act, a turnover-based threshold that applies regardless of whether the player is professional or amateur.
3. Place of supply: online, on site, hybrid
The draft applies the logic of art. 8 VAT Act:
- Tournaments held exclusively online: supplies are treated as IT related services, taxable at the place of the recipient (art. 8 para. 1).
- Tournaments held exclusively on site: supplies qualify as entertainment services, taxable at the place where the activity is carried out (art. 8 para. 2 let. c).
- Hybrid formats: VAT treatment follows the option chosen by the player or spectator when purchasing access. Where hybrid participation is mandatory, or where the participant does not have to choose in advance, the "online" treatment (place of recipient) applies by default.
4. Key VAT takeaways for e sports stakeholders
Event organisers must precisely determine the format of their competitions to correctly identify the place of supply, the VAT treatment of tickets, entry fees and prize money, and their reporting obligations. Foreign-based organisers should also check their own liability under the rules on electronic services. E-sports players should review the VAT treatment of their prize income, particularly when participating regularly in tournaments in Switzerland or internationally.
As this is a first position taken by the SFTA on these issues, the new practice should in principle only apply going forward, once formally published. Anticipation nonetheless remains essential to plan accordingly. RSM Switzerland supports affected stakeholders in analysing their transactions, determining the appropriate VAT qualification of their flows and implementing suitable processes to ensure long-term compliance. Our VAT team is available to review your projects and assist you in securing your VAT position and obligations.
