Charitable foundations in tax law - open questions
Non-profit status depends largely on the framework conditions. If these are right, people are willing to make a contribution - be it through donations or volunteering. Tax law provides important incentives: it exempts charitable organizations from tax liability and allows donations to charitable organizations to be deducted from taxable income. Tax law has thus made a significant contribution to the strong growth of the charitable sector in recent years. The foundation sector is booming.
Foundations and value added tax
Since the introduction of value added tax (VAT) in 1995, its application to foundations has repeatedly given rise to discussion. Questions such as whether and when they are liable to pay tax, whether they are allowed to deduct input tax or when they are considered charitable still give rise to discussions today. The Federal Supreme Court has also dealt with VAT issues relating to foundations on several occasions. In the new revision of the Value Added Tax Act (VATA), there are also changes that could affect foundations in particular. This article deals with the most important issues that foundations have to deal with in the VAT environment.
VAT treatment of fiscal and other financial incentives to promote business locations
As a result of the global minimum tax, Switzerland must rethink its existing fiscal incentives to strengthen the location of business standards. The tax advantage of existing incentives (e.g. special R&D deduction, patent box) loses its effectiveness for affected companies. The first cantons are therefore proposing new instruments such as the Qualified Refundable Tax Credit or state subsidies. This article examines the question of whether such new incentives to promote business locations fall under the VAT term "subsidies and other contributions under public law" and how they should therefore be treated, in particular to what extent a reduction of the input tax deduction should be applied or can be waived.
Partial revision of the MWSTG and current developments
On June 16, 2023, the Federal Assembly adopted the partially revised VAT Act. In addition to the core element of taxing supplies via electronic platforms, the partial revision also includes numerous changes in the areas of internationalization, tax reductions, combating fraud and other simplifications. Entry into force is planned for January 1, 2025. Whether this date can be met also depends to a large extent on the partial revision of the VAT Ordinance, the draft of which is currently undergoing consultation from October 25, 2023 to February 8, 2024.
Publication of the drafts of the practical definitions of the VAT Department
On January 29, 2019, a revised first draft on the VAT practice topic: Cryptocurrencies was posted on the website. The deadline for comments is February 19, 2019, and the first draft will remain on line after the practical consultation.
VAT registration for mail order companies
On 1 January 2019, Article 7(3)(b) of the Federal Law on Value Added Tax (the so-called mail order regulation) will come into force.
Repayment of VAT on reception fees to all households in preparation
In four test cases, the Federal Court ordered on 2 November 2018 the refund of VAT on radio and television reception fees from 2010 to 2015. As a result of these rulings, the Federal Department of the Environment, Transport, Energy and Communications (DETEC) is proposing that the Confederation refund VAT to all households. DETEC is now preparing a legal basis for a lump-sum refund in the form of a credit to all households without the need for them to take action.
Parliament puts pressure on Billag VAT refunds
The Federal Council must create a legal basis so that the unlawfully levied VAT on radio and television reception fees can one day be repaid. Following the National Council, the Council of States has also approved a motion.
New VAT regulation Online shopping abroad could become more expensive from 2019
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.
MWST: Publications on the Value Added Tax Act MWSTG
On 12 and 24 July 2018, substantive amendments concerning the publications on the partial revision of the VAT Act were published on the website of the FTA.
Applications for reduced rates
The Council of States wants to introduce a new VAT privilege for the hotel industry. It has accepted a motion by Stefan Engler, member of the Bündner CVP Council of States, calling for a "simplification" of packages. These are combinations of services or products that are taxed at different VAT rates. Today, the entire package is taxed at a reduced rate if at least 70 percent is subject to a reduced rate. Such combinations of services occur mainly in the hotel industry: The overnight stay taxed at a rate of 3.7 percent is combined with ski passes, wellness treatments or guided tours to form a package. This means that these services are also subject to the reduced hotel rate.
Transactions et restructurations: cas pratiques en matière de TVA
Cas pratiques présentés par Umberto Ottavianelli et Jacques Pittet lors du séminaire ISIS) du 03 novembre 2021, intitulé "Restructurations / Fusions / Acquisitions".
Current developments in VAT law (2021)
Workshop by Ralf Imstepf and Roger Rohner on the occasion of the ISIS) seminar on 14/15 and 21/22 June 2021 entitled "Corporate Tax Law 2021".
ISIS) seminar "VAT. Up-to-date. Compact. Interdisciplinary." (Seminar folder)
Case studies, detailed solution notes and slides: Here you will receive all documents (workshops and presentations) according to the following description from the ISIS) seminar "VAT. Up-to-date. Compact. Interdisciplinary." on 24.09.2020 under the direction of Harun Can, which took place at the Marriott Hotel in Zurich.
