VAT obligation and fiscal representation for foreign companies in Switzerland

Are you a company based abroad and active in Switzerland, or planning to enter the lucrative Swiss sales market soon? Then you should consider enlisting the services of a Swiss fiscal representative. But what is a fiscal representative and why do you need one? In this article, you will find out everything you need to know about fiscal representation in Switzerland, and what you need to consider as a foreign entrepreneur with respect to Swiss VAT.

What is a fiscal representative?

A fiscal representative (aka “tax representative”) is an authorized natural or legal person appointed by a foreign company to fulfil tax-related obligations on their behalf in a specific country. In Switzerland, a fiscal representative acts as an intermediary between the foreign company and the Swiss tax authorities or the Federal Customs Administration, ensuring compliance with the country’s tax laws and regulations. Among other duties, the fiscal representative assumes all VAT-related obligations with the Swiss Federal Tax Authority on behalf of the foreign company.

When and why do you need fiscal representation in Switzerland?

Prior to 2018, foreign companies with a turnover of less than CHF 100,000 in Switzerland were not required to register for Swiss VAT themselves and could therefore conduct their business without a fiscal representative in Switzerland or a Swiss VAT number. However, since the reform of Swiss VAT law, all foreign companies that provide taxable services in Switzerland and have a worldwide turnover of more than CHF 100,000 per year are subject to VAT in Switzerland. Only foreign companies whose worldwide annual turnover is less than CHF 100,000 are exempt from VAT.

Taxable supplies include, but are not limited to, the following activities:

• Operating a warehouse in Switzerland
• Provision of services under a contract for work and services
• Carrying out work on objects such as assembly, installation or maintenance of objects
• Digital services, e.g. electronic provision of software or music
• Other physical activities in Switzerland
• Mail-order sales of goods to Switzerland at the standard tax rate, with a value of less than CHF 65 per order but more than CHF 100,000 in total per year

Among others, companies domiciled abroad that provide services in Switzerland that are exclusively subject to purchase tax, such as consultancy services or services in the field of advertising, are exempt from taxation. Also exempt from tax are foreign companies that exclusively supply electricity and natural gas in pipelines to taxable persons in Switzerland. Such electricity and gas suppliers do not have to register as taxable persons in Switzerland.

Switzerland does not allow non-resident companies to directly register for VAT. Therefore, foreign businesses who have neither a place of residence nor a place of business in Switzerland need to appoint a fiscal representative to fulfil their Swiss VAT obligations.

What are the functions of a fiscal representative?

A fiscal representative in Switzerland carries out several crucial functions on behalf of the foreign company. These include:

1. Assessment of VAT liability in Switzerland: The first function of a fiscal representative is to determine whether the foreign company is liable for VAT in Switzerland based on their business activities and annual turnover.
2. VAT registration: If it is deemed that the company is liable for Swiss VAT, the fiscal representative assists the foreign company in registering for VAT with the Swiss Federal Tax Administration (FTA). They handle the application process, ensuring that all necessary documentation is submitted correctly.
3. Tax compliance and filing of the VAT return: The representative ensures that the foreign company remains compliant with Swiss VAT regulations. This includes preparation and submission of quarterly VAT returns on a timely basis, maintaining important records, and communicating with the Swiss tax authorities on applicable tax-related matters. The representative can also help to make a subsequent declaration without penalty if the mandatory VAT liability in Switzerland already existed at an earlier point in time.
4. Representation: The fiscal representative acts as the official representative of the foreign company in all VAT-related matters. They communicate with the tax authorities, respond to inquiries, and handle any disputes or audits on behalf of the company.
5. Ongoing advice: the representative is there to provide the company with ongoing advice on all its tax-related matters in Switzerland based on an analysis of the company’s individual situation and needs.

How much does fiscal representation in Switzerland cost?

The cost of fiscal representation in Switzerland can vary depending on various factors, including the complexity of the company’s operations, the volume of transactions, and the services provided by the chosen representative.

At Nexova AG, we charge a competitive rate for our fiscal representation services; which generally includes a one-time application fee of CHF 500 and an annual fee of CHF 1200. Foreign companies looking for fiscal representation in Switzerland need to consider the costs involved, and at the same time ensure that they choose a reputable fiscal representative with a proven track record. Nexova AG offers a highly professional service at a reasonable rate.

Swiss VAT

Value Added Tax (VAT) is a consumption tax levied on the supply of goods and services. The current standard VAT rate in Switzerland is 7.7%. However, certain goods and services are subject to lower rates, while some are completely exempt. Foreign companies need to understand the applicable VAT rules specific to their industry and turnover.

Read more here for in-depth information on what foreign companies need to consider with respect to their VAT liability in Switzerland.

VAT registration with a fiscal representative

As mentioned, foreign companies who are liable for VAT in Switzerland must register through their appointed fiscal representative. The representative will handle the registration process, ensuring that all required information is submitted accurately and on time.

During the VAT registration process, the fiscal representative provides the necessary details about the foreign company, such as its legal form, business activities, turnover, and contact information. This information is mandatory for the Swiss tax authorities to assess the company’s VAT liability and monitor compliance.

VAT statement

Once the foreign company is registered for VAT in Switzerland, they are required to submit regular VAT statements to the tax authorities. The VAT statement contains detailed information about the company’s taxable supplies, VAT-liable transactions, and input tax credits. It also provides a comprehensive overview of the company’s VAT activities on a quarterly basis.

The fiscal representative plays a major role in ensuring that the company’s VAT statement is accurate, complete, and compliant with Swiss tax regulations. They work closely with the company to ensure that the VAT statement is submitted timeously and correctly.