25 years of Swiss VAT – What a journey! Part 3: If Switzerland was in the EU… - Tax and Legal blog

Header 25 years VAT Switzerland

25 years after the introduction of VAT in Switzerland, we reflect on how the Swiss VAT landscape would look like if Switzerland were part of the EU.

What are we looking at?

This year marks the 25th anniversary of the introduction of VAT in Switzerland. In our series of dedicated blogs, we want to reflect on various related topics. This time we want to give a flavour of what the Swiss VAT landscape would have looked like if Switzerland had accessed the European Union (EU) and hence the EU VAT territory. Of course, this blog is not exhaustive and does not represent a judgment on Switzerland and EU accession.

What would have been the VAT impact of being part of the EU?

In the EU Switzerland would have been part of the European single market and would have had to comply with Directive 2006/112/EC (VAT Directive). Here is a flavour of how it would have slightly redefined our Swiss VAT landscape:

  • Supplies of goods to/from Switzerland from/to another EU Member State would not qualify as imports/exports but intra-EU acquisitions/supplies, which are subject to strict rules (notably the VAT exemption for intra-EU supplies) and reporting obligations
  • VAT rates would be significantly higher. Indeed, the standard VAT rate to be applied by all EU Member States must be at least 15%, and the average in the EU is approximately 20%, compared to 7.7% in Switzerland. Reduced rates, to a minimum of at least 5%, can be applied in the EU on specific goods or services listed in Annex III to the VAT directive, and there are a number of exceptions subject to conditions. For Switzerland, the higher EU VAT rate would imply price increases in almost all daily goods and services and some businesses would be affected as well. For example, a Swiss bank acquiring software for CHF 1 million used for a VAT exempt activity faces now a VAT cost of CHF 77k. With an average VAT rate of 20%, the VAT cost would be CHF 200k
  • Swiss companies would have more VAT reporting obligations than just periodic VAT returns; e.g. recapitulative statements for intra-EU transactions, intrastat returns, etc.
  • Some businesses would benefit from specific EU VAT rules; e.g., the “single entity principle” whereby a Swiss head office would not have to self-assess Swiss VAT on charges by its foreign branches, financial services to recipients outside the EU would open the right to recover input VAT, etc.

And in the end?

Although similar, there are differences between both VAT systems. However, Switzerland underwent several VAT revisions to harmonise its legislation with the EU rules and others are expected in the near future (e.g.; e-commerce marketplace rules) but always with the ability to take into account the specificities of its economy.

If you would like to discuss more on this topic, please do reach out our key contacts below.

Key Contacts

Constant Dimitriou_110x110

Constant Dimitriou - Director, Indirect Tax

Constant is an Indirect Tax Director within Deloitte in Switzerland with more than 15 years of experience in EU VAT and Swiss VAT covering all industries, especially the trading sector. He specialises in advisory on complex international supply chain projects (structuring and optimization), VAT reviews, due-diligences, assistance with VAT audits and report and compliance.


Steven Torres 110x110

Steven Torres - Consultant, Indirect Tax

Steven is a Tax Consultant at the Deloitte Geneva office. Prior to joining Deloitte, he worked for a major industrial company as VAT and GL accountant and gained 3 years of experience in the start-up environment. He is assisting multinational companies with VAT consulting, VAT compliance as well as M&A due diligence projects.



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