Thanks to its strong purchasing power and rapidly growing online market, Switzerland is a highly attractive market for businesses looking to expand their reach. However, entering the Swiss market involves navigating a complex web of regulations, particularly customs, VAT, and invoicing. Understanding these rules is crucial for success in selling goods or services.
Understanding Swiss VAT: Who needs to register?
If your business provides goods or services in Switzerland, you may need to register for Swiss VAT. Here's how to determine if your business is liable:
Threshold for VAT Liability: If your global turnover exceeds CHF 100,000 in the previous 12 months, you are required to register for VAT in Switzerland. This applies regardless of whether your customers are businesses or consumers.
Goods vs. Services:
Goods: Businesses selling physical products to Swiss customers must comply with Swiss customs and VAT regulations, as goods are subject to import VAT.
Services: Swiss VAT applies to many services, particularly those provided locally or tied to physical locations, such as repair work, construction, and events. Services provided remotely may also trigger VAT obligations if the recipient is based in Switzerland.
Fiscal Representation: Non-Swiss businesses liable for VAT must appoint a fiscal representative within Switzerland. This entity handles tax registration, VAT reporting, and communication with Swiss authorities on your behalf.
Selling services in Switzerland: Key considerations
Selling services to Switzerland presents unique challenges compared to selling goods. The Swiss VAT law takes a broader approach to what constitutes a "taxable supply." For instance:
Services classified as deliveries: Activities like repairing goods in Switzerland or installing machinery can be considered "inland deliveries," subjecting them to VAT.
Real-estate services: If your service relates to Swiss real estate, such as architectural work, you must comply with local VAT rules.
Event-Related Services: Services related to cultural, educational, or entertainment events in Switzerland are also under Swiss jurisdiction.
For other services, such as IT, consulting, or SaaS, the general rule is that the service is taxed where the recipient is located. It is essential to determine whether the client is a business or a private individual, as it affects whether VAT applies.
Customs and taxation for goods
If you're selling goods, customs is a significant hurdle. Swiss customs operate differently from EU countries, with duties based on weight rather than value. Import VAT: The import VAT rate in Switzerland is 8.1% (as of 2024). This applies to most goods entering the country unless they qualify as low-value shipments (import VAT under 5 CHF).
Invoicing Swiss customers: Best practices
Whether you sell goods or services, invoicing Swiss customers correctly is vital to ensure compliance. Businesses must consider several elements, particularly when VAT is involved:
When to Include VAT:
If your business meets the CHF 100,000 turnover threshold and is VAT-registered in Switzerland, you must charge Swiss VAT on taxable supplies.
VAT is often excluded for cross-border sales to Swiss businesses if the buyer handles it under a reverse-charge mechanism (primarily for services).
Goods shipped from outside Switzerland generally require import VAT, which the recipient pays unless exemptions apply.
Invoice Requirements: A Swiss-compliant invoice must include:
Your Swiss VAT registration number (if you have one)
A clear description of goods or services, including the date of supply.
The total amount payable, including VAT, where applicable.
A note for non-taxable transactions, e.g., “not subject to VAT under Swiss VAT law.”
Exemptions for Small Shipments: If the import VAT for a single shipment is less than 5 CHF, the shipment is exempt from VAT. However, exceeding CHF 100,000 in total shipments per year triggers VAT obligations.
Strategies for success
Expanding your business into Switzerland is an excellent growth opportunity, but preparation is vital. Here's how to make the process smoother:
Automate VAT compliance: Use solutions like Norman's tax automation tools to manage invoicing. This saves time and minimizes errors.
Partner with Swiss logistics providers: Collaborating with local logistics experts can help streamline customs and shipping processes, ensuring quicker delivery and better customer satisfaction.
Understand your product and service obligations: Clearly define whether your offerings are classified as goods or services under Swiss regulations. Seek expert advice for complex cases, such as construction or digital services.
Be transparent with customers: Inform Swiss customers about potential import duties, VAT charges, and delivery timelines. Transparency builds trust and improves satisfaction.
Expanding into the Swiss market requires understanding the nuances of tax laws, customs procedures, and consumer expectations. By staying informed and leveraging the right tools, your business can successfully navigate the challenges and reap the benefits of this high-potential market.