Switzerland: introduction of platform taxation per 01.01.2025

Background: e-commerce rules of 2019

Under Swiss customs law, import VAT below CHF 5 is not levied. In other words, shipments with a value under CHF 62 (CHF 200 for reduced rated goods), so called small consignments or low value consignments, are not subject to Swiss import VAT upon importation. This will not change in 2025.

To avoid a non-taxation of e-commerce sales and distortions of competition with Swiss retailers, Switzerland introduced in 2019 a so-called e-commerce regulation (Versandhandelsregelung, ventes par correspondence, vendita per corrispondenza). Under this legislation, the merchants operating online are "obliged" to register for Swiss VAT if they sell more than CHF 100'000 p.a. of low value consignments to Swiss customers. This legislation proved to be inefficient, essentially due to its "voluntary" character. Indeed, there was no mean to monitor the sales of the merchants and force them to register once the threshold was reached.

Admittedly, 18 pages of merchants registered under this scheme (Versandhaendler_Publikation.pdf (admin.ch)), not many of them being the Asian merchants which were initially the target of this regulation.

2025: platform taxation

The strategy is to have the platform instead of the merchants in charge of the VAT obligations in Switzerland by introducing a deemed supplier model. As often in VAT matters, Switzerland copy-pasted the solution of the EU and added its Swiss touch to make it completely different (remember the difference between supply of goods and supply of services?).

According to the new law, digital platform means an electronic interface that facilitates interaction between two or more users online with the aim of providing a supply of goods or of services.

Any person who facilitates a supply of goods to be made with the aid of a digital platform by bringing sellers together with purchasers to conclude a contract on the platform shall be deemed to be a supplier in relation to the purchaser. In this case, there is a supply both between the merchant and the platform and between the platform and the customer.

Any platform who fulfils one or more of the following conditions shall not be deemed to be a deemed supplier:

1. It is neither directly nor indirectly involved in the ordering process.
2. It does not generate turnover directly related to the business.
3. It only carries out the payment processing in connection with the supply.
4. It only provides space for advertisements.
5. It only provides advertising services.
6. It only redirects or forwards purchasers to other electronic platforms.

This new platform taxation is applicable only to platform selling goods and not to platform facilitating the supply of services (especially for the transport of passengers or the provision of accommodation. The rental or leasing of goods, which is technically a supply of goods under Swiss VAT law, is also excluded from this regulation according to the current draft of the administrative practice). These platforms only have a legal obligation to provide information to the VAT authorities.

Interestingly and contradictory to what can be read in many places, there is no special rules regarding the VAT liability of the platform. All platforms are not eo ipso VAT registered per 01.01.2025. Platforms can or are obliged to register for VAT according to the general rules. As an e-commerce company (same rule as for the merchants since the platforms are now the deemed suppliers) a platform can register for VAT:

• "mandatorily" if the platform facilitates more than CHF 100'000 p.a. of small consignments according to the e-commerce rule of 2019.
• "voluntarily" under a subordination license (Unterstellungserklärung, déclaration d'engagement, dichiarazione d'adesione). This solution enables the platform to be VAT registered as per 01.01.2025, act as importer of record, pay and recover or defer the import VAT on high value consignments and invoice local VAT on the sales to its Swiss customers (on low and high value consignments). This solution provides the best possible customer experience. The customer can purchase with local VAT as from a local retailer and has no hassle and no additional costs in relation with the importation and customs clearance.

The sale from the merchant to the platform is zero-rated (even if it is a local sale in Switzerland).

VAT is due by the platform on the value of the goods as indicated to the customer on the platform. The platform must be able to issue an invoice for all the supplies facilitated on Swiss territory. This invoice is basically issued in the name and for the account of the merchant. The platform will add Swiss VAT on the domestic transactions. A statement of the type "VAT at 8.1% (or 2.6%) transferred according to art. 20a of the Swiss VAT law by [name and VAT number of the platform]" is useful. If the merchant also issues an invoice, it must not indicate any Swiss VAT.

Regarding importation: in principle, the VAT registered platform is the importer of record, import VAT being levied on high value consignments only. An import VAT deferment scheme (reverse charge mechanism), called transfer procedure (Verlagerungsverfahren, procédure de report, procedura di riporto del pagamento dell’imposta sull’importazione) is available to mitigate the cash-flow aspect. Without this procedure, import VAT is recoverable as input tax according to the general rules.

The key element here for platforms is ensuring that they are mentioned as importer of record in the customs import declaration based on the information provided by the merchant on the shipment itself. A solution here might reside in an interface between the platform and its merchants enabling the printing of sticker with all necessary information (recipient = Swiss customer, importer of record = platform with its import VAT deferment authorization number, value, etc.), stickers to be attached on the package and then used by the customs agent to do the import declaration. Without this, the risk of double taxation exists, the customer paying import VAT (+ customs clearance fees) to the Swiss customs and local VAT to the platform. This should be avoided.

Under certain circumstances, it is possible for the merchant or the customer to act as importer of record.

The deemed sale from the platform to the customer is subject to local VAT on low value and high value consignments.

Administrative measures against non-compliant platforms

The tax authorities may order administrative measures against a platform who makes supplies on Swiss territory if that platform either fails to register as a taxable person or fails to comply or only partially complies with its reporting or payment obligations. Administrative measures include an import ban for all shipments originating from the platform, the destruction of the shipments at the border without compensation and finally the publication of a blacklist of the non-compliant platforms.

Consequences for the merchants

Merchants currently registered for VAT in Switzerland due to the e-commerce regulation and selling via platforms can basically deregister as per 31.12.2024.

To be noted that merchants will be jointly liable with the platform for its VAT debts. A hold harmless clause in the agreement with the platform might be a good idea.

Conclusion and next steps

Import VAT remains levied on high value consignments only also in 2025, this does not change. Under the new platform taxation however, the sales by VAT registered platform are subject to local VAT by the platform on low value and high value consignments.

Detailed information about platform taxation were issued in July by the VAT administration. An updated version is expected by end October - beginning of November. Platforms operating in Switzerland will have plenty of time to register for VAT in time for the 01.01.2025. However, in the background, all systems must be set-up already now to be compliant per 01.01.2025. The correct importation and the mention of the platform as importer of record are the key elements here.