Upcoming Revision of the Swiss VAT Law – Draft publication of the guidelines regarding the new e-commerce rules has been published by the SFTA on 9 July 2024

The Swiss Federal Tax Administration has released on 9 July 2024, the first draft of the guidelines for the new e-commerce Swiss VAT rules, which are set to take effect as of January 1st, 2025. More details on this can be found in our previous blog post.

The guidelines – through a completely new sector VAT info n° 27 - confirm and provide detailed information on the SFTA's position regarding different aspects of the new provisions. This includes description of various scenarios when a platform should be considered a deemed supplier, the conditions under which the rules are applied, and the reporting and formal obligations that platforms may have. A significant change outlined in the guidelines is that platforms, whether facilitating the supply of goods or services, shall have a recurring yearly obligation to disclose information to the SFTA if certain thresholds are met regardless of whether the supplies are in scope of the current platform rules. This introduces a new reporting obligation for platforms in Switzerland, which shall, according to the draft VAT info, be submitted electronically.

This blog aims to provide a brief overview of the main points that were published in the draft guidelines. Note, however, that they are still under consultation until 23 August 2024 and are pending confirmation from the Federal Council. Modifications of the guidelines are, therefore, still possible.

What will change in 2025?

As reminder, the upcoming Swiss VAT Law revision will introduce the concept of "deemed supplier" for electronic platforms that facilitate the sale of goods. There will also be an obligation for all electronic platforms to provide information. The draft guidelines are comprehensive and provide clarity on the new provisions. The following comments summarize some of the main points of the draft guidelines.

(1) General specificities around the deemed supplier concept

The guidelines start by defining new terms that will be used for Swiss VAT purposes and that are important for the forthgoing reading of the guidelines, e.g., platform, electronic interface, deemed supplier, underlying seller, consignment, low value consignment.

Platforms are considered as deemed suppliers when they facilitate, through their electronic interface, the sale of goods between a seller and a buyer with the sale/contract being concluded on this platform. The guidelines provide more details on the application of the deemed supplier concept, notably:

• whether the platforms facilitate the transaction or not must be analysed on a transaction basis
• all other supplies of goods than the sale of goods (broader definition than in the EU for example), such as leasing, or work carried out on goods as provided for in art. 3 let. d VATL, are not considered
• the order must take place on the platform. If the platform is not aware of the goods to be delivered or the final price paid (e.g., because it does not issue a final invoice and/or negotiations occur between the seller and the buyer afterwards), these transactions may be excluded from the deemed supplier concept
• it is not relevant which party is responsible for transporting the goods.
• the status of the underlying supplier and the final client is not relevant meaning that B2C, B2B C2C and C2B transactions are in scope.; e.g., platforms may have to collect Swiss VAT on domestic C2C transactions while no Swiss VAT applies today

When the conditions of the deemed supplier concept are met, the platform is required to collect VAT on the transactions in the following cases:

• if the goods are already in free circulation on Swiss territory at the beginning of transport
• in the case of the sale of goods imported into Switzerland, whether the platform has reached CHF 100k of low-value goods supplied from abroad and imported into Swiss territory, or if the platform has an import license. This could be also the case if the underlying seller acts as the importer of record of the goods in Switzerland, meaning that the fictitious supply between the supplier and the platform would be located on the Swiss territory.

Even if the platform is already registered for VAT in Switzerland, it would only be liable to collect Swiss VAT as well as following the additional requirements as deemed supplier in the above cases. However, the newly published guidelines make clear that the exact assessment and implementation for the platform rules depends on a number of factors such as (Swiss) VAT registration status of the underlying seller, ship from location of the goods as well as how underlying seller and deemed supplier agree to work together. Mapping out the transactions taking the different parties in the supply chain, physical movement of goods as well as establishment / registration status of the different parties into consideration seems unavoidable in order to be able assess the impact and demanded change management of the newly applicable rules.

Additionally, the guidelines provide the following information that needs to be considered by the platforms:

• platforms are required to apply specific invoicing requirements (e.g., specific mention on the invoice) and provide specific documents in case of a Swiss VAT audit (e.g., a list of all transactions facilitated, along with reconciliation with the transactional reports provided to the underlying sellers)
• a transactional report from the platform to the sellers will serve as a valid document to support the VAT exemption for the fictitious supply between the seller and the platform
• contrary to what was anticipated in the draft VAT ordinance, platforms will be allowed to apply the VAT margin scheme or the fictitious input VAT deduction scheme if the underlying seller is not registered for Swiss VAT (provided all other conditions for the corresponding regimes are met)
• platforms that are not established on the Swiss territory are not required to appoint a Swiss fiscal representative for VAT purposes but an address on the Swiss territory will have to be communicated (notably for audit purposes)
• the SFTA will publish a blacklist of platforms that do not comply with their Swiss VAT obligations to inform Swiss customers (in addition to other restraining measures).

Finally, the guidelines outline various measures that should be implemented between underlying sellers and platforms to facilitate Swiss VAT reporting. Underlying sellers and platforms need to collaborate and align on their specific scenarios (e.g., when it is decided by both parties that the underlying seller, registered for Swiss VAT, acts as the importer of record in Switzerland instead of the platform). For each transaction flow, information should be made available to the 3rd Party Logistic Provider (3PL), including details like the customs account/import VAT deferment license number of the platform or who needs to be indicated as the importer. It is important for sellers to coordinate with the platforms as they still have a subsidiary liability towards the SFTA, even if the platform is considered the deemed supplier.

(2) Obligation to provide information

All platforms, regardless of whether they facilitate the sale of goods or services, will have the obligation to provide information to the SFTA.

They will have to maintain a register listing the supplies rendered on the Swiss territory, or at least be capable of providing information on the annual sales generated on the Swiss territory, by the various underlying suppliers operating on the platform. Only information (defined list) on suppliers with annual turnover of over CHF 50,000 need to be reported to the SFTA electronically. Initially, it was anticipated that platforms would only provide this information to the SFTA upon request. However, according to the draft guidelines, platforms (except those qualifying as deemed suppliers) with over CHF 1 million of contracts concluded through their interface will have an annual electronic reporting obligation towards the SFTA.

Deloitte’s view

The draft guidelines provide welcomed first clarity and confirmation on the application of new e-commerce rules from a VAT technical point view notably on the deemed supplier concept and how operationally the law should be implemented in the business flows of the platforms and underlying suppliers.

As always, difficulties and complexity will arise when applying the rules (qualification as deemed supplier, different VAT treatments on a transaction level for platforms applying different business models, etc.).

It is also worth noting that the new rules trigger a new set of formal obligations (invoicing requirements, register, etc.) as well as the obligation for platforms with a certain transaction volume to report annually and electronically information to the SFTA, which comes as a surprise. It seems that the SFTA followed the example of other jurisdictions to obtain information in order to identify suppliers who need to register for Swiss VAT. There are however some still uncertainties regarding this reporting obligation: Would platforms facilitating VAT exempt without credit transactions be in scope (e.g., OTC trading platforms)? What will be the reporting format? What does the 1 million threshold cover?

It is important to note that the guidelines are still in draft status until the final publication, and modifications can still occur. Whether some of the points will be completed or amended remains to be seen.

Next steps

All platforms having activities with a link with the Swiss territory must start assessing, based on the guidelines (although still in draft), the impact on their current business model(s) and define which modifications are necessary in their day-to-day operations. This may include ERP systems amendments, website modifications, deciding on future models, drafting policies and amending agreements towards underlying suppliers, ensuring the necessary data for reporting purposes will be available, setting up new reporting and compliance procedures, etc. It is of course of upmost importance to watch-out the publication of the final SFTA guidelines to be ready for implementation.

If you would like to discuss more on this topic, please do reach out to our key contacts below. Deloitte has developed an impact assessment methodology including change management considerations and issue logs with which we are already supporting a number of clients on their journey into the new world with platform rules.

Authors

• Romy Mueller - Partner, Indirect Tax
  
• Constant Dimitriou - Director, Indirect Tax 
• Steven Torres - Assistant Manager, Indirect Tax