New VAT regulation Online shopping abroad could become more expensive from 2019
Silvia Hunziker
The Federal Council has decided that mail order companies with a turnover of at least CHF 100,000 in Switzerland must pay VAT. Foreign online merchants today do not have to pay VAT on small consignments with a tax amount of less than five francs. For Swiss mail order companies, however, different rules apply: The consignments are subject to VAT if the company is entered in the VAT register. From 1 January 2019, this unequal treatment will cease.
Additional revenue of CHF 20 million
The Ordinance on the Mail Order Trade Regulation was put into force by the Federal Council on 15 August 2018. It is part of the partial revision of the Value Added Tax Act and aims to create a level playing field for foreign companies and companies based in Switzerland. The Federal Council estimates the additional revenue resulting from the new mail order regulation at CHF 20 million per year.
In the transitional provisions, the Federal Council has defined who will be liable to pay tax from 2019. This is the case if the company achieves a turnover of at least CHF 100,000 in 2018 and it is expected that deliveries will also be dispatched in 2019.
If a company falls below the turnover limit of CHF 100,000 at a later date, it must report this to the tax administration. Otherwise it remains liable for VAT.
Orders from abroad increase
Online shopping on foreign websites is popular. In 2017 alone, Swiss people ordered 23 percent more from abroad than in 2016, according to a study published in February by the Association of Swiss Mail Order Companies (VSV), the market research company GfK and Swiss Post.
A new regulation is already in force, according to which companies become liable for VAT if they generate at least CHF 100,000 in turnover in Switzerland and abroad. Previously, only the turnover generated in Switzerland was relevant, which gave foreign companies a competitive advantage.
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