Switzerland is extending the red carpet for tighter VAT compliance on online marketplaces and sellers—effective January 1, 2025. And by “extending the red carpet,” we indicate that they‘re stringing up the tax net tighter so that everyone, be it, global e-commerce titans or small-time international sellers, should play by the same fiscal rulebook. This reform is not merely about paperwork; it‘s a tactical shift to bring Swiss tax policies in line with the EU and the UK, promoting more equitable competition between domestic and foreign companies.
So, if you‘re an online seller, this blog is specifically for you – to refresh your knowledge on VAT compliance in 2025.
Let’s understand the current VAT rules & gaps
Switzerland‘s VAT regime has been a convenience playground for foreign vendors, courtesy of some thresholds and exemptions. But with 2025 looming, all that is about to change. Here‘s an explanation of the existing regime and where it leaves scope for much-needed tax planning.
1) VAT provisions for foreign vendors
- Currently, foreign vendors are required to charge Swiss VAT only if their yearly turnover is more than CHF 100,000 on small consignments.
- This VAT law threshold only applies to sales to Swiss customers, and therefore it is quite simple for vendors to remain under the radar.Â
2) Small consignments defined
“Small consignments” are shipments whose import VAT is below CHF 5—a category extremely lenient to low-value e-commerce sales.
To put figures to it:
- Goods subject to the standard 8.1% VAT rate qualify if they’re valued at up to CHF 62.
- Goods subject to the reduced 2.6% VAT rate qualify if they’re valued at up to CHF 200.
- The cherry on the cake? Low-value consignments are exempt from import VAT, making Switzerland a foreign seller’s dream destination for evading tax obligations.
3) Loopholes that favor foreign vendors
Since only those crossing the CHF 100,000 barrier in small batches need to be registered for VAT, most foreign vendors easily set up their business to remain just below the threshold—no VAT law, no worries!
This has provided an unlevel playing field, where local businesses have to charge VAT while some foreign vendors toe the line.
How are New Marketplaces compelled to uphold VAT compliance?
Switzerland is drawing a line: if you‘re operating an online marketplace, you‘re not merely a matchmaker between sellers and buyers—you‘re now also part of the tax-collecting team. The time for tax-free digital middlemen is running out, and marketplaces will be responsible for VAT compliance. Here‘s what you should know:
1) Marketplace as Supplier
- Starting in 2025, marketplaces will be considered suppliers for VAT purposes under specific conditions.
- That is, the marketplace—and not the seller—has to charge VAT to the final consumer and pass it on to the Swiss tax authorities. you‘re taking a commission from sales, you‘re also taking on tax obligations.
2) Compulsory Registration
- Platforms with a yearly turnover of more than CHF 100,000 are required to register with Swiss tax authorities.
3) Voluntary Registration
- Smaller marketplaces (those under CHF 100,000 turnover) can register voluntarily under VAT compliance to function as importers of record.
- This allows them to collect VAT in advance, smoothing out customer payments and precluding VAT law surprises.
4) Marketplaces are now responsible for:
- VAT collection – ensuring the correct tax is charged.
- VAT reporting – submitting the numbers to Swiss tax authorities.
- VAT remittance – ensuring collected VAT ends up in the government’s reserves.
In short, marketplaces will be performing the role of tax agents.
5) Â Consequences of Non-Compliance
If a marketplace chooses to disregard these new regulations, the repercussions are:
- Goods can be rejected at customs
- In severe cases, goods can even be destroyed.
6) Not all digital platforms will qualify as a “supplier” for VAT purposes.
Platforms can escape this designation if they:
- Are not directly or indirectly part of the ordering process.
- Do not derive turnover directly from sales.
- Only handle payments (and don’t control the actual transaction).
- Simply host ads without enabling sales.
- Merely reroute buyers to other platforms without taking a cut.
With these revisions, Switzerland is sending a clear message: if you’re facilitating sellers to make money in Switzerland, you’re also liable for Swiss taxes.
What is the impact on VAT-registered traders?
While marketplaces now collect VAT, traders aren’t completely off the hook. Here’s how the new system affects them:
1) Deregistration Option
- Good news for VAT-registered traders; If a marketplace assumes VAT obligations, traders can deregister for marketplace sales from January 1, 2025.
- Less paperwork, fewer tax nightmares, and no more VAT calculations to worry about.Â
2) Joint Liability
Before traders get too comfortable, here’s the catch: They remain jointly liable for VAT debts. The solution? Clear tax responsibility agreements with platforms if you don’t want unexpected tax bills due to non-compliance.Â
Changes to VAT Exemptions and Rates
Switzerland’s VAT law is being revamped, and it’s not merely about taxing e-commerce platforms. The new regulations extend VAT exemptions and adjust lower VAT rates, providing relief to different sectors.
Change |
Description |
|---|---|
|
Extension of VAT Exemptions |
Switzerland is extending VAT exemptions under Art. 21 VAT Law, enabling more services to be run tax-free—but without the privilege of VAT credit. |
|
Medical Care Facilities |
Day clinics and outpatient clinics will now join hospitals in their VAT exemptions. If it runs like a hospital, it will be exempted |
|
Care Coordination Services |
For the first time ever, care coordination services in the context of medical treatments will be VAT-exempt. A victory for the healthcare sector. |
|
Social Welfare & Security Services |
VAT exemptions already go to public institutions, but from 2025, private home care services, nursing homes, and the likes of them will get in on the action. |
|
Travel Agency Services |
Travel agencies will be joining the VAT exemption club with an optional tax scheme. Good news for globe-trotters. |
|
New Product Category at Reduced Rate |
A yet-to-be-disclosed product category will get the 2.6% reduced VAT rate. |
Get Ready for VAT Compliance in 2025
With VAT law reforms in Switzerland on the horizon, traders and platforms have a simple choice: change or incur penalties. To make the transition seamless and prevent any unpleasant surprises from Swiss tax authorities, marketplaces need to register with Swiss tax authorities if they fall within the new VAT scope. VAT-registered traders selling via marketplaces can deregister if the platform assumes VAT collection. Simply, get on the right list.
Marketing platforms must also audit VAT collection, reporting, and remittance processes to ensure compliance. This means checking everything—from how VAT is collected to how it arrives in the Swiss tax office.
Bhavya Shah
Bhavya Shah is a Business Analyst at iCreative Technologies. He specializes in the eCommerce consulting for all business domains. He is working hand-in-hand with developers and clients to produce requirements and specifications that accurately reflect business needs and are technologically achievable.
