As of the introduction of VAT in Switzerland 25 years ago, the Principality of Liechtenstein adopted most of the technical articles of the Swiss VAT law. In honour of the close cooperation of the two countries, we want to provide an overview of key areas to be consider regarding Swiss VAT in cases with a connection to the Principality of Liechtenstein.

The longstanding friendship and close cooperation between the two countries led as of 1 January 1924 to an inclusion of the Principality of Liechtenstein into the Swiss customs territory. With the introduction of VAT in Switzerland, further collaboration was sought. The Principality of Liechtenstein has adopted widely the technical articles from Swiss VAT law into its own VAT legislation. In addition, a bilateral agreement details the cooperation between the VAT authorities of the two countries.

In the following, we would like to highlight areas with both concurrences and discrepancies between the VAT law of Switzerland and the Principality of Liechtenstein.

VAT registration

Liechtenstein has, for example adopted Art. 5 to 14 of the Swiss VAT law. Accordingly, the requirements for a mandatory VAT registration and the option to a voluntarily VAT registration are, in principle, the same. Further, the principles of the place of supply rules for the supply of goods and services are identical.

Liechtenstein domiciled entities register for VAT with tax authorities in the Principality of Liechtenstein whereas Swiss domiciled entities register for VAT with the Swiss Federal Tax Administration (“SFTA”). Foreign domiciled entities with supplies that lead to a VAT registration in the Swiss customs territory need to register with the SFTA. Based on this principle, a Swiss VAT registered entity may declare Liechtenstein turnover via it Swiss VAT returns.

While Switzerland maintains a publically available electronic register of entities with an UID (Business Identification Number), in which it can be verified whether an entity is VAT registered with the SFTA, such a register is not in place in Liechtenstein. Hence, VAT numbers of Liechtenstein domiciled entities are not publically available online.

Contrary to Swiss VAT law a Liechtenstein domiciled entity that only achieves turnover abroad is exempt from VAT liability.

Entities that are only VAT liable due to the acquisition of services need to register with the Liechtenstein VAT authorities and file an annual acquisition

tax return on an official form provided by the authorities. In Switzerland, the declaration of acquisition tax is declared with a letter to the SFTA.

Cross-border VAT grouping between Swiss and Liechtenstein domiciled entities is not possible. Further, note that within the Swiss customs territory the single entity principle applies. This means that branches in Switzerland are seen as part of the headquarter in Liechtenstein and vice versa.

Other deviations

Many of the articles adopted from the Swiss VAT legislation are a full copy paste to insure congruence. However, there are deviations with a direct legal impact as the above-mentioned exemption from a VAT registration. Other deviations may be rather political, e.g. in the Principality of Liechtenstein the male form of terms applies still for both genders, while the Swiss VAT law mentions both forms in each occurrence.

In connection with the refund of input VAT incurred in the Principality of Liechtenstein, a separate application with the Liechtenstein tax authorities needs to be filed. These amounts cannot be included in an inquiry with the SFTA. On the other hand, since the import VAT is always assessed by the Swiss Customs Administration such a refund needs to be claimed with the SFTA in any case.

While the Liechtenstein authorities have their own procedures regarding VAT audits and legal procedures, for final decisions on the interpretation of the technical articles the Swiss Supreme Court is in charge.

Overall, there is wide accordance, especially in day-to-day business between Swiss and Liechtenstein VAT law. However, the fact that the Principality of Liechtenstein is a sovereign state with its own law and institutions need to be kept in mind also for VAT purposes.

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

Key contacts

Tim Reck - Director, Indirect Tax

Tim an Indirect Tax Director based in the Deloitte Zürich office. With over 20 years' experience, Tim is one of the most experienced technical experts known for his work on advising international VAT across the 28 Members of the EU and Switzerland. Tim oversees VAT planning and execution of Swiss based principals trading internationally, from the initial conception of the company through to designing the efficient supply chain, the associated compliance, and ERP implementation. Tim is a Certified German Tax Accountant. He is a member of the VAT competency center of the professional organization for auditors and tax advisors, Expertsuisse. The International Tax Review has listed Tim as an Indirect Tax Leader 2015, 2016, 2017, 2018 and 2019 for Switzerland

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Matthias Höhn - Senior Manager, Financial Services Tax & Legal

Matthias is the key contact person in the German speaking region of Switzerland for VAT related questions in the financial sector. He has over six years of experience with Deloitte and holds a LL.M. VAT from the Kalaidos Technical University and Master of Law from the University of Zurich. In the Swiss financial services industry he has supported clients in various VAT matters, including M&A advisory, compliance and rulings with the Swiss Federal Tax Administration.

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