Our Deloitte blogs (n°1, n°2 & n°3) on the upcoming partial revision of the Swiss VAT Law continues this time by presenting the upcoming envisaged changes for businesses providing services within the area of “Travel” and connected Sectors, such as in providing “Cultural events”.

Place of Supply
What are the current rules?
Under the current Swiss VAT Law, the place of supply of services is in general deemed to be the place at which the recipient of the service has its registered office or a permanent establishment for which the service is provided, or in the absence of such, its domicile or the place of his normal abode.

However, the Swiss VAT Law specifies further the so-called special place of supply rules under Art.8(2), lit c and d Swiss VAT Law:

(i) For services supplied by travel agencies and event organisers, the place of supply is deemed where the person supplying the service has his registered office or a permanent establishment, or, in absence of such a registered office or such permanent establishment, the domicile or the place from which the person works.

(ii) In the area of culture, the art, sport and the science, scholarship, entertainment or similar services, including services of the event organisers and related services, such services are perceived to be at the place where these activities are actually performed.

What shall change in 2025?
Within the expected partial revision of the Swiss VAT law, the following changes for the aforementioned services are foreseen for Art.8(2), lit c and d partial revision of the Swiss VAT law (rVATL):

(i) For “Travel Agencies” the revised law deletes the wording of “travel agencies and event organisers” and instead replaces it “for travel services  and related travel agency services retailed by travel agencies”, as well as specifying that it will be where not the person is “supplying” the service but instead where the person “is operating the travel agency” would have its registered office.

(ii) For “culture, art, sport and science, scholar, entertainment or similar” services instead, the reference is made that such services which are “provided directly to persons physically present on site”, the place of supply is deemed to be the place where these activities are actually performed.

Art. 21 rVATL includes a provision, which exempts without credit considerations demanded for participation in cultural events (e.g. registration fees), together with the ancillary services included.

Consequence
(Foreign) established Travel Agencies will no longer be liable for VAT in Switzerland, even if they organize trips being fully carried out within Switzerland. Hence, potential Swiss input VAT incurred in connection with such services will be excluded on services purchased in Switzerland.
The partial revised Swiss VAT Law considers a new VAT exemption for travel services retailed by travel agents and related travel agency services.
It will be possible to deduct input tax for travel services retailed by travel agents and the related services of the travel agents, if the services are provided or used abroad.

Deloitte’s view
We will need to see how the Swiss Federal Tax Administration (“SFTA”) will apply the new regulations, especially:

• What is the exact meaning of “services retailed” by travel agencies and who falls under this definition?
• Can foreign providers easily VAT de-register as of 31 December 2024?
• What is the input VAT position of the providers (before and after the change)?
• Will it economically make sense to opt for taxation?
• Will acquisition tax not apply anymore on such services to be acquired?

Whilst there is still a lot to be clarified in the near future, there are clear upcoming changes in the place of supply of services that in turn have the potential to provide a steppingstone to avoid having to register for VAT, but conversely restrict companies and their right to recover input VAT.

Next steps
We carefully noticed the upcoming Swiss VAT Law changes. We expect that the SFTA will update the VAT Info and Industry brochures accordingly and will provide us for further insight and better consequential understanding. Nevertheless, it is important that business who are affected from the anticipated changes assess the potential impact and evaluate their VAT position in Switzerland. Deloitte will be happy to discuss with you the impacts on your business.

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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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 27 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, 2019, 2020, 2021, 2022 and 2023 for Switzerland

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Adriana Vitale - Manager, Indirect Tax

Adriana is a Manager in the Indirect Tax Team in Zurich (Deloitte Switzerland) assisting with Swiss as well as International Indirect Tax matters, such as VAT, VAT M&A. She has expertise with Global VAT Project Coordination, Due Diligence and tax technology.

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Sascha Lustenberger - Consultant, Indirect Tax

Sascha is an Indirect Tax Consultant at the Deloitte Zurich office. He previously worked for a major international bank. Sascha is assisting multinational companies with VAT compliance, VAT consulting and VAT reporting.

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