Upcoming revision of the Swiss VAT Law – introduction to the changes for government, public services and non-governmental organisations - Tax and Legal blog


We continue our series of blogs (n°1, n°2, n°3, n°4) on the upcoming partial revision of the Swiss VAT Law (rVATL), which will come into force on 1 January 2025. In this blog, changes related to government, public services and non-governmental organisations are discussed.

From January 1, 2025, a new definition of the concept of a subsidy and amendments relating to VAT exempt without credit supplies will be included in Swiss VAT law.

New definition of subsidy added in the law (art. 18 para. 3 VATL)

According to current practice, to qualify as a subsidy pursuant to article 18 para. 2 of the Swiss VAT law, the contribution received by the beneficiary must fulfil three conditions: the funds are paid by a public authority, the author of the subsidy does not receive any compensation from the recipient and the subsidy is based on a legal basis (ordinance, regulation, decree, etc.).

The revised VAT law will introduce an additional provision in para. 3, which specifies that if a public authority explicitly indicates to the recipient that the funds provided constitute a subsidy or other contribution under public law, these funds are to be considered as such. This creates a legal fiction that the recipient of the funds should be able to rely on the description used by the public authority to describe the payment. A public authority will have until the end of each finalisation period (end August of the following year) to communicate to the recipient that the funds paid constitute a subsidy or other public contribution. Public authorities will, however, not be allowed to arbitrarily classify financial funds as subsidies, as they are bound by the law applicable to subsidies and the conditions attached thereto.

As a reminder, subsidies and other public law contributions are not subject to VAT and the recipient should proceed with a correction of the input VAT when receiving such funds. Whether tax credits/incentives could qualify as subsidies does not seem to be tackled by this change.

VAT exempt without credit supplies: extension of the scope

  1. Changes in the provision of personnel by non-profit institutions (art. 21, para. 2 ciph. 12 VATL)

Currently, art. 21 para. 2 ciph. 12 of the Swiss VAT law specifies that religious or ideological non-profit institutions, which loan their staff to provide medical treatment, social assistance and social security, child and youth care, education and training, or religious, charitable, and community purposes, provide a VAT exempt without credit supply.

As from 1 January 2025 the provision will no longer refer to “religious or ideological” non-profit institutions, but only to non-profit institutions. The pursuit of a religious or ideological purpose is therefore no longer required in order to fall under the VAT exemption. This change will enable any non-profit institution to loan staff to perform social, educational, charitable or any other community work, without creating a VAT cost for the entity renting the personnel services. We are of the opinion that this provision will encourage the loaning of staff by non-profit institutions. This change is similar to a provision introduced in the past to facilitate staff loans between public authorities (also considered VAT exempt without credit).

2. Changes to the provision of supplies between institutions or foundations founded by public authorities (art. 28, para 2. ciph. 28 letter c VATL)

As per the current legislation, supplies rendered between institutions or foundations founded by public bodies and the public authorities that founded them, are VAT exempt without credit. The VAT exemption is currently applicable only if the institutions or foundations have been founded by public authorities.

The revised Swiss VAT law has adjusted this provision and will extend the scope of the VAT exemption without credit to include foundations and institutions that are managed by public authorities. This implies that the institution or foundations do not necessarily need to be founded by public authorities. As a result, supplies provided or received by institutions or foundations founded or managed by public authorities will be VAT exempt without credit.

This change was introduced in response to the fact that many institutions and foundations are not founded exclusively by public authorities but instead are merely managed by a public authority.

By way of example, services provided between a privately founded medical care establishment managed by a public authority and that public authority will fall within the scope of this VAT exemption. This means that management services or accounting services provided by the public authority to the medical care establishment will be treated as VAT exempt without credit services.

Deloitte’s view

The recipient of a subsidy will be able to rely on the terminology used by the public authority if the latter describes the payment as a subsidy. If there is an exchange of supply against the funds received, the qualification of subsidy can, however, not be used.

The changes linked to VAT exempt without credit supplies entail a scope extension. Consequently, additional supplies will fall under the definition of “VAT exempt without credit”. The option to tax is, however, still possible for taxpayers who wish to voluntarily apply Swiss VAT.

Next steps

Recipients of subsidies, as well as public authorities, and non-profit organisations registered for VAT should assess the impact of these future changes. It might be beneficial in some cases to consider to opt to tax on VAT exempt supplies, in order to allow the recovery of input VAT on certain costs incurred in the framework of the activity.

If you would like to discuss 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.


Katharina Blattner_110

Katharina Blattner - Senior Manager, Indirect Tax

Katharina is an Indirect Tax (VAT) specialist in the Swiss Deloitte practice and has more than 17 years of experience in advisory. She helps Swiss and foreign companies manage their VAT risks and compliance and has extensive experience in cross-border sales, tax due diligence, VAT audits, and negotiating rulings with the VAT authorities. Her expertise and industry focus is on government and public sector organizations.



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.



Mona Bouasria - Senior Consultant, Indirect Tax

Mona is a Senior Consultant in the Deloitte VAT team based in Lausanne. She started her career in early 2021 after graduating from the University of Fribourg with a master's degree in Economics. In her daily work, she is involved in projects related to Swiss VAT compliance and VAT advisory for international and Swiss clients.



Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Comments are moderated, and will not appear until the author has approved them.