Changes in VAT Regulations in Switzerland for E-commerce Starting January 2025

Switzerland, like other European countries, is introducing new regulations aimed at reducing tax fraud, particularly in the e-commerce sector. Starting January 2025, a revision of VAT rules in Switzerland will focus on two key aspects: increasing the responsibility of marketplace platforms for VAT collection and ensuring a level playing field for both domestic and foreign sellers.

The new regulations mean that sales platforms will be responsible for collecting and remitting VAT in Switzerland on behalf of their sellers. This is a step toward harmonizing the rules with European regulations and aims to better address tax fraud in international trade.

History of VAT System Changes in Switzerland

The reform planned for 2025 is part of a broader effort that began in 2018 when Switzerland tightened regulations for foreign sellers. Previously, foreign companies could sell up to CHF 100,000 per year without needing to register for VAT, giving them an unfair advantage over local businesses. The changes introduced in 2018 required foreign companies to register for VAT in Switzerland based on their global turnover, rather than only sales within Swiss territory.

In 2019, the tax authorities clarified the rules for so-called “small consignments” – goods with a VAT value of less than CHF 5. While these items are exempt from import VAT, foreign companies whose sales of such goods exceed CHF 100,000 per year are required to charge VAT on their transactions in Switzerland.

Despite these changes, many foreign sellers continued to disregard the rules and issued invoices without VAT. To address this, the authorities decided to impose VAT collection responsibilities on e-commerce platforms that mediate sales to Swiss customers.

What Does the VAT Reform in Switzerland Mean for Sellers and Marketplaces?

The new rules apply exclusively to the sale of goods through marketplaces – services are currently excluded. According to the new definition, a marketplace is a platform that actively participates in the transaction between a seller and a consumer, such as through order handling and payment. Platforms that only provide advertising services or process payments are not subject to these new regulations.

Any marketplace that exceeds a specified global sales threshold will be required to register for VAT in Switzerland. Smaller platforms may choose to register voluntarily, which will allow them to simplify processes for sellers and facilitate expansion into the Swiss market.

VAT registration in Switzerland means the following for platforms:

• The ability to act as the importer of record on customs documents
• The obligation to collect VAT on sales and remit it to the tax authorities
• Joint liability with the seller for the proper settlement of VAT

If these new rules are not followed, customs authorities may refuse to allow goods to enter the market or even order their destruction.

How Should Sellers Prepare for the New Regulations?

Sellers will need to determine their sales channels and ensure they comply with the new tax obligations. There is a risk of double taxation – once through the marketplace and again in the seller’s Swiss VAT return. It is crucial to verify whether the marketplace is actually collecting and remitting VAT and if the seller needs to register for VAT purposes.

Some marketplaces, like Manor, require their sellers to have a Swiss VAT number in order to handle import clearance themselves. In such cases, the seller is responsible for paying the import VAT, while the marketplace collects VAT on sales. To recover the import VAT, the seller must have a VAT registration number in Switzerland.

For marketplaces, the new regulations mean that their accounting systems will need to be adjusted to meet new obligations, including proper invoicing and correct VAT calculation and reporting in Switzerland. More information can be found on the Swiss Tax Authority’s website.

Need Help?

If you are selling in Switzerland, it’s important to prepare for these upcoming changes. Contact VAT experts to ensure your transactions comply with the new regulations. We offer assistance with VAT registration, filing returns, and tax representation, ensuring full compliance with the laws in Switzerland.