On 16 February 2018, the Swiss Federal Tax Administration (FTA) published information on the mail order regulation that will come into force on 1 January 2019. In particular, the background to the relevant revision of the VAT Act as well as the new legal situation and the associated obligations of taxpayers are specified in more detail. However, the relevant provisions of the Regulation have not yet been adopted and therefore certain amendments may still be necessary.
The partial revision of the VAT Act is intended to put foreign companies engaged in mail order business on an equal footing with companies domiciled in Switzerland. The previous unequal treatment results from the fact that for reasons of collection economy, no import tax is levied on imports of goods if the tax amount is CHF 5 or less (so-called small consignments). The buyer of the goods can thus purchase small consignments from abroad without being charged VAT, whereas the same consignment is subject to domestic tax when purchased from a domestic mail-order firm or retailer entered in the VAT register.
As of 1 January 2019, the following applies in principle: If a (domestic or foreign) mail order company achieves at least CHF 100,000 turnover per year from small consignments that it transports or sends from abroad to Switzerland, its deliveries are deemed to be domestic deliveries. He then becomes liable to pay tax in Switzerland and must be entered in the VAT register. From the moment of registration in the VAT register, not only the small consignments of the mail-order company are regarded as domestic deliveries, but also all other consignments for which the import tax amount is more than CHF 5. As a result, for a taxable mail-order company, all domestic consignments are subject to domestic tax. Domestic tax is therefore due on both small consignments and consignments subject to import tax. However, no import tax is still levied on small consignments.
The taxable mail-order company can therefore deduct the import tax (it is considered to be the importer) and all other input tax incurred in the course of its business activity and which entitles it to deduct input tax. In order to make it clear whether the import tax must be charged to the mail order company or the consignee, the parcel must be clearly and unambiguously marked. The name and VAT number of the mail order company must be included on the address label. In addition, a VAT-compliant invoice or a pro forma invoice (cf. Art. 26 MWSTG) must be attached to the package, showing the domestic tax. The customs declarant must know the name, address and VAT number of the mail order company. The mail order company must provide this information to the declarant with the VAT 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 made in the twelve months from 1 January 2019 will be subject to mandatory taxation from 1 January 2019 and must register in the VAT register. If a mail order business commences its activities in connection with Switzerland after 1 January 2019, its transport and mail order supplies will be deemed to be made in Switzerland as soon as it reaches the turnover threshold of CHF 100,000 per year with such small consignments. He must then register in the VAT register. If a domestic or foreign company is entered in the VAT register on the basis of other services in Switzerland and if this company also makes transport or dispatch deliveries with small consignments from abroad to Switzerland, these small consignments continue to be foreign sales (with the exception of companies with an approved "foreign subordination declaration"; see the above). For this company, too, the deliveries only become domestic deliveries when the limit of CHF 100,000 per year from such deliveries (small consignments) is reached.
Mail-order companies can voluntarily make themselves liable to tax by means of the "Declaration of subordination abroad" even before they reach the turnover limit applicable to tax liability or before the mail-order scheme 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 considered the importer and can also claim the import tax as input tax. The delivery to the domestic buyer is subsequently deemed to be a domestic delivery for him.
If a domestic or foreign mail order company fulfils the conditions for tax liability, it must register with the FTA independently. The foreign mail-order company must have a tax representative with a place of residence or business in Germany. In addition, security must be provided in the form of an unlimited joint and several guarantee of a bank domiciled in Switzerland or a cash deposit. The FTA provides on its website a list of companies registered as mail order companies in the VAT register.
All information is available in detail here.
