Continuing our series of blogs (n°1 & n°2) on the upcoming partial revision of the Swiss VAT Law (rVATL), which will come into force on 1 January 2025, this blog presents the main changes in the area of VAT compliance and administrative obligations.

As from 1 January 2025, companies registered for Swiss VAT will be able to report VAT on an annual basis.

The partial revision also introduces new rules to waive the obligation to appoint a fiscal representative for foreign taxpayers and joint liability for managing directors for VAT-related debts.

Annual VAT reporting
What are the current rules?
Today, Swiss VAT can be reported on a quarterly, semi-annually or monthly basis. The payment and refund of VAT follows the same periodicity as the VAT returns.

What shall change in 2025?
Once the partial revision of Swiss VAT comes into force, small and medium-sized enterprises will also be able to file annual VAT returns and thereby potentially reduce their reporting periodicity. The annual VAT return should also be available for companies in a VAT refundable position, although it may not be beneficial.

Conditions and requirements for annual VAT reporting
Two conditions must be met to apply for the annual VAT reporting, as stated in the rVATL:

1. The annual taxable turnover does not exceed CHF 5,005,000.
2. The taxpayer must have filed the VAT returns and paid all tax claims fully and on time in the last three tax periods. If the tax liability dates from a shorter period, the SFTA considers the periods since the tax liability began. 

Note that a VAT return is deemed to be submitted on time if it is submitted within 60 days of the end of the reporting period or within the extension of the filing and payment deadline granted by the SFTA. The payment of VAT is also deemed to be made on time if it is received by the SFTA within 60 days of the end of the reporting period or within the extension of the payment deadline granted by the SFTA.
It is therefore recommended always to request an extension of the filing and payment deadline via the ePortal; the extension has no impact on late payment interest, which is due as from the normal deadline given by the SFTA.

Advance payments
Annual VAT reporting is associated with the obligation to pay advance payments (Art. 86a rVATL) to the Swiss Federal Tax Administration (“SFTA”). The advance payments will be assessed by the SFTA together with the application for annual reporting and is usually based on the tax due for the most recent tax period, i.e. on the basis of the VAT returns filed for the past calendar year.

If the effective reporting method (Art. 36 VATL) respectively the flat tax rate method (Art. 37 para. 5 VATL) is applied, the advanced payments must be made on a quarterly basis, whereas if the net tax rates method is applied (Art. 37 para. 1-4 VATL), the advance payment must be made on a semi-annual basis.

The advance payments will then be offset against the final tax position according to the submitted annual return. If the advance payments are higher than the VAT position reported in the annual return, the remaining amount will be refunded to the taxpayer.

The SFTA can levy late payment interest (art. 87 para. 1bis rVATL) on payments after the deadline or if the taxable person did not (fully) pay the advance payments.

Start and end of annual VAT reporting

Changing to annual VAT reporting is possible at the beginning of each tax period and the request needs to be filed within 60 days as of the beginning of the tax period via the ePortal of the SFTA or, for new taxpayers, 60 days from the receipt of the VAT number. Once approved, annual VAT reporting must be applied for at least one full tax period. It is therefore recommended to assess the VAT situation of the company during November / December 2024 and submit the application by the end of February 2025 at the latest.

If a taxable person fails to file the request for the change of the reporting cycle on time, a new request can be filed after the end of a full tax period at the earliest.

 The same deadline and effect apply where a taxable person does not want to use annual VAT reporting anymore. After a switch from annual to monthly, quarterly, or semi-annual VAT reporting, a return to annual VAT reporting is only possible after the end of three full tax periods.

The SFTA can revoke the authorisation to apply annual VAT in the following cases:

• The taxpayer exceeded the annual turnover threshold of CHF 5,005,000;
• The taxpayer requested for a reduction of the advance payments that is too high;
• The SFTA had to assess the VAT due because the taxpayer did not submit their annual VAT return;
• The SFTA is engaging in legal proceedings against the taxpayer because of unpaid VAT debts.

Fiscal representation and joint liability of managing directors
What are the current rules?
Notifying decisions or any official communications to taxpayers outside Switzerland is, in principle, only possible through diplomatic channels, which are not available practically for day-to-day business. Therefore, taxable persons with no domicile, registered office or permanent establishment on Swiss territory must appoint a fiscal representative domiciled or with its registered office or permanent establishment on Swiss territory in order to allow communication with the SFTA.

What shall change in 2025?
The Swiss VAT law revision will make it possible for the SFTA to waive the appointment of a tax representative if other means that facilitate communication with the foreign taxpayer are in place.

Furthermore the partial revision of the Swiss VAT law provides for joint liability for managing directors and makes it possible for the SFTA to request security from the managing directors when there are indications that they previously went bankrupt. Outstanding VAT payable can be offset against the security if debt collection against the company was unsuccessful.

Other new compliance-related rules in force as from 1 January 2025

• Lump-sum method: the lump-sum method cannot be applied by taxable persons who are:
  o Deemed to be suppliers in accordance with art. 20a VATL (we refer to our blog published on 15 February 2024)
  o Established outside Switzerland
• Notification procedure: if a taxable supply exceeding CHF 15,000 is paid in cash between two registered persons, the notification procedure must be applied.
• Passenger traffic: the proof of export for goods in the context of passenger (private individual) traffic can be provided electronically.

Deloitte’s view

Concrete cases where the SFTA may waive the obligation for a foreign company to appoint a fiscal representative are not yet clearly defined. The explanatory notes to the VAT Law revision mention that the existence of a double taxation treaty allowing the SFTA to reach out directly to the foreign taxpayer could be an example of such case. The practice of the SFTA still needs to be defined in this respect.

Next steps

Companies registered for VAT purposes in Switzerland should assess their eligibility to apply for annual VAT reporting and analyse the pros and cons of changing the reporting periodicity, bearing in mind that they still need to make periodic advance payments.

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

Key contacts

Romy Mueller - Partner, Indirect Tax

Romy is leading the Swiss Deloitte VAT team and is responsible for SAP Tax within Deloitte Switzerland. She has 20+ years experiences in advising Swiss and international companies in all VAT matters. Her focus is on international trade structures, M&A and post-merger integration.

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Coralie Dumoulin - Director, Indirect Tax

Coralie is Indirect Tax Director with 19 years of experience in VAT. Prior to joining Deloitte, Coralie worked for a Swiss multinational company of the Manufacturing and Consumer Business sector. As Manager at Deloitte Switzerland, she was assigned on a 3-years secondment at Deloitte Global Tax Center (Europe). Coralie has a wide experience in many Swiss and European VAT matters, including practical skills in dealing on a day-to-day basis with the systems.

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Naomi Savioz - Manager, Indirect Tax

Naomi is a Manager in the Geneva Indirect Tax team, working with Deloitte Switzerland since 2017. She has experience in providing VAT compliance and advisory services to Swiss and international clients. She has participated in new supply chain implementation projects and manages several global VAT compliance coordination projects.

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Rebecca Liechti - Manager, Indirect Tax

Rebecca is a Manager in Deloitte Zurich’s Indirect Tax team. Before joining Deloitte in January 2010, she worked for several small and medium-sized businesses and gained overall 8 years of experience in different sectors. She is assisting multinational companies with VAT compliance, VAT consulting as well as VAT reporting and has improved her indirect tax knowledge through different projects. Rebecca has a vocational education background and has a Bachelor in Business Administration with focus on finance/auditing as well as an LL.M. VAT both from a technical university.

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Lionel Tschumper - Senior Consultant, Indirect Tax

Lionel is a Senior Consultant in the Deloitte Indirect Tax team based in Berne. He joined Deloitte in 2021. In his daily work he supports international and Swiss clients related to VAT advisory and VAT compliance as well as M&A due diligence projects.

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