A company's global turnover will now be decisive for mandatory tax liability, and no longer just its turnover in Switzerland. Companies whose global turnover is at least CHF 100,000 will be liable to VAT from the first franc of turnover in Switzerland. Previously, foreign companies could provide their services in Switzerland without VAT up to a turnover level of CHF 100,000, which led to competitive disadvantages for Swiss businesses, especially in the border regions.

There will be a delay of a year for the mail-order regulations. These will not come into force until 1 January 2019, as Swiss Post needs more time for the implementation of the statutory provisions for technical reasons. Consequently, mail-order companies will be liable to tax from 2019 if their annual turnover from small consignments that are import-tax-free is at least CHF 100,000. Such mail-order companies will themselves bill customers for VAT. In return, the customers will no longer have to pay the taxes and fees levied by Customs upon importation. The VAT-related competitive disadvantages for domestic companies will be reduced as a result.

The remaining changes – reduced VAT rate for electronic newspapers, magazines and books, margin taxation for collectors' items and others – will all enter into force on 1 January 2018.

Financial implications

The amendments adopted by Parliament in 2016 will lead to a total increase in receipts of an estimated CHF 70 million p.a. What is of most relevance here is that global turnover will now be used for tax liability. This measure alone will lead to an increase in receipts of an estimated CHF 40 million p.a.

The amendment of tax rates based on the 2020 retirement provision reform is not part of this revision. Because the tax rates are set out in the Constitution, the people and the cantons have to consent to an amendment. Swiss voters will vote on the federal decree on AHV supplementary financing by means of a VAT increase on 24 September 2017.

Federal Council brings revised Value Added Tax Act into force