The Swiss VAT Ordinance ("OVAT") states that any person who carries out in an independent manner a commercial, industrial, professional or other activity with a view to realising income in Switzerland, is subject to VAT if the total income value of the deliveries, services provided or value of self-supplies exceeds SFrs.75,000 per year (article 17 OVAT). VAT applies even in the absence of a profit motive. OVAT also provides that VAT applies to individuals, partnerships, private or public legal entities, public bodies and any group of persons which does not have a strict legal entity, but carries out activities under a common commercial name.

This means that a foreign company having commercial operations located in Switzerland may have to register for VAT purposes if its annual Swiss turnover is higher than SFrs.75,000.

Deliveries of goods are deemed to occur in Switzerland if the goods are on Swiss territory at the time of transfer of the right to use the goods or if their transport begins on Swiss territory. Non-Swiss companies are unlikely to provide taxable services since the companies are deemed, for VAT purposes, to be resident in their country of origin or country in which they have a permanent establishment. However, there are some exceptions to this general rule concerning services, such as supplies of transport services, or services related to land and buildings, where the business activity is carried out in Switzerland.

It should be noted that the importing of goods into Switzerland is generally also subject to VAT, but that there is not a requirement for the foreign business entity to register for VAT purposes.

The content of this article is intended to provide general information on the subject matter. It is therefore not a substitute for specialist advice.

Deloitte & Touche Experta - Geneva, Yvon de Coulon and Per Prod'hom, Telephone (+41 22) 788 02 46 / Facsimile (+41 22) 788 03 16.