Changes to the Swiss VAT Act Effective 1 January 2025

The partially revised Swiss VAT Act (VATA), the revised VAT Ordinance (VATO), and several other important amendments came into force on 1 January 2025.

While the revision primarily affects specific sectors such as e-commerce platforms and travel agencies, it also introduces a number of changes that may impact SMEs and other businesses. Below is a summary of the most important developments.

Changes to the Flat Tax Rate Method

Businesses may continue to account for VAT using the Flat Tax Rate Method (FTRM) if they meet the following cumulative requirements:

• Annual taxable turnover (including VAT) must not exceed CHF 5,024,000.
• The VAT payable, based on the applicable flat tax rate, must not exceed CHF 108,000.

The applicable flat tax rate depends on the company's industry and the nature of its services.

Updated Flat Tax Rates

Following a periodic review, the Swiss Federal Tax Administration (FTA) has adjusted the flat tax rates for certain industries and business activities.

Use of Multiple Flat Tax Rates

Businesses may now apply more than two flat tax rates simultaneously. The existing 10% rule remains unchanged.

Abolition of the 50% Rule

Businesses operating in multiple sectors—for example, sporting goods retailers—must now apply several flat tax rates where appropriate.

The previous 50% simplification rule, which eased VAT reporting for mixed activities, has been abolished.

Discontinuation of Special Rules

The previous special procedures (Forms 1050, 1055, and 1056) relating to exports, notional input tax deductions, and margin taxation have been abolished.

Switching from the Effective Method to the Flat Tax Rate Method

Businesses changing from the effective VAT accounting method to the Flat Tax Rate Method must adjust any previously claimed input VAT based on the current value of assets and services and repay the corresponding amount to the Swiss Federal Tax Administration.

Exclusions

Businesses domiciled outside Switzerland and operators of electronic platforms are no longer eligible to use the Flat Tax Rate Method.

Annual VAT Returns

From 1 January 2025, businesses with annual turnover of up to CHF 5,005,000 may apply to submit one VAT return per year.

Advance VAT payments must still be made quarterly or semi-annually.

Late payments or advance payments that are significantly too low may result in the withdrawal of the annual filing authorisation.

Approval will generally only be granted if the business has consistently submitted VAT returns and made payments on time in the past.

Subsidies

An important clarification concerns government subsidies.

Where a public authority designates financial support as a subsidy, it will automatically be treated as a subsidy for VAT purposes as well.

This change is intended to improve legal certainty for both public authorities and subsidy recipients.

In addition, financial benefits granted by public authorities may still qualify as subsidies even if they are not explicitly described as such. A technical assessment therefore remains necessary in certain cases.

Changes to VAT Exemptions and Tax Rates

The revised legislation introduces both new exemptions and extensions to the catalogue of VAT-exempt services.

The changes affect several sectors, including:

• Healthcare
• Culture
• Travel services
• Social services

Healthcare

A number of new VAT exemptions apply within the healthcare sector.

The following services are now exempt from VAT:

• Services provided by outpatient clinics and day clinics
• Certain infrastructure services supplied by these institutions
• Coordinated healthcare services related to medical treatment (such as managed care and home nursing services)
• Medical treatments provided by psychologists, pharmacists, and optometrists

Culture

From 1 January 2025, admission fees for cultural events—including registration fees and related ancillary services—are exempt from VAT, aligning the rules with those already applicable to sporting events.

Travel Service Providers

Travel agencies that resell travel services benefit from the VAT exemption where the package includes at least one accommodation or passenger transport service.

Foreign travel agencies are not entitled to a refund of Swiss input VAT.

Swiss VAT-registered travel agencies may continue to deduct input VAT on administrative services where the resold travel services are consumed abroad.

Feminine Hygiene Products

Frequently used feminine hygiene products are now subject to the reduced Swiss VAT rate.

Mail-Order Platforms

From 1 January 2025, electronic platforms may themselves become liable for Swiss VAT even where they merely act as intermediaries between sellers and buyers.

This is achieved through the introduction of a deemed supply chain.

A platform becomes liable for Swiss VAT if:

• Its worldwide turnover is at least CHF 100,000, and
• It either facilitates domestic supplies or imports goods into Switzerland, including low-value consignments.

The VAT-liable platform must issue a VAT invoice for every taxable domestic supply.

A platform is considered the supplier if it facilitates the conclusion of the sales contract and acts as an intermediary in the transaction.

Platforms that merely process payments or have no direct involvement in the ordering process are generally not regarded as suppliers.

The new rules also introduce additional obligations, including:

• Secondary liability
• Information and reporting obligations
• Stricter administrative enforcement measures

Where platforms fail to comply, the Swiss Federal Tax Administration may prohibit imports and even order the destruction of shipments.

The changes also affect sellers, particularly in the mail-order sector, because platforms may now act as importers. Sellers may nevertheless continue to act as importers where they use the applicable import deferral procedure.

A notional input VAT deduction is generally not available to electronic platforms.

Transfers of Emission Rights

Transfers of emission allowances and comparable rights are now subject to the reverse charge mechanism, including transactions between two companies established in Switzerland.

Further Information

Further details are available from the Swiss Federal Tax Administration (FTA): Changes to Swiss VAT from 1 January 2025.

Source: Treuhand | Suisse