Generally tax-free, but not always:
The export of services from Switzerland to other countries
Services that can be charged according to the recipient location principle are exempted from VAT. This results in two essential questions: What are services and what services can be billed under the recipient location principle?
Basically, it is advisable to consider not only the Swiss VAT law but also the tax regulations in the country of the customer by exporting services. Most of the Swiss service exports go to EU countries. The EU countries have indeed largely harmonized their sales tax regulations, but not completely. Therefore we advise to consider the sales tax regulations of each country in which customer of exported services resides.
At the beginning it should be noted that the EU states and Switzerland have quite different interpretations of the law when it comes to define the service. All work on objects, and even if it is only a testing procedure, are from the Swiss perspective delivered goods. The rental of items like cars is regarded in Switzerland as delivered goods. Due to the delivery of good the eVV must be verified and must be declared in paragraph 220 of the VAT settlement, the service must be documented by accounting and related documents and must be declared in paragraph 221 of the VAT settlement.
As I said, the rule of recipient location principle applies generally on services. But this rule has some exceptions, typically when the service is not provided at the location of the recipient.
Excluded are first of all the hotel and catering services. So foreign guests have to pay their accommodation in Swiss hotels with the usual tax.
The next exception are the events. These events include in all possible areas, going from sports to culture to education. Even foreign operators who organize an event in Switzerland, become subject to the Swiss VAT law.
The same applies analogously to medical treatments, life counseling and the like. Again, the place of treatment determines which law will apply.
Another exception is the services for land and property, here is the place of land and property defines the applicable law.
If the recipient location principle is not applicable, there is, in contrast to Switzerland in the EU a further distinction in service deliveries: The B2B services business (Business to Business) and B2C services business (Business to Consumer). While in the B2B in the EU, the VAT liability can be passed to the recipient (reverse charging), the service provider must pay the VAT in B2C.
So, a Swiss provider of paid webinars for end users, thus an obvious electronic service in B2C, becomes subject of taxation in each and every EU country where his webinar will be sold.
The same is true for a Swiss event organizer, if an event for private clients is held in Austria: The Swiss event organizer will be subject to VAT in Austria. If this event is sold to business customers then the value added tax can be passed on in B2B to the recipient.
Somewhat more complex are the issues for multinational companies where the national companies will charge in inter company business.
So VAT has to be paid when a Swiss supplier provides service for a Swiss subsidiary, but the bill is sent to the parent company abroad. Given the economic facts is the bill must be sent to the Swiss subsidiary, of course, with value added tax.
The VAT of hospitality services can not be avoided by means of associated domestic companies. While it possible for a resident company to deduct VAT, but by passing on of to the associated foreign company, the VAT has to be paid again, because it is value added tax from the hospitality industry. May be, here the foreign company, if it does not engage in businesses in Switzerland, will apply for a refund at the FTA.
VAT in the international arena does always require further evaluation to control tax related risks.
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