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Tax and Legal
David Merz | Founding Partner
Zurich, August 12, 2023
The increasing trend towards cross-border online trade provides many opportunities for businesses to access new consumer markets from around the globe. The Swiss market has become particularly attractive for online shops based in the EU. It is essential for these businesses to understand the customs and tax obligations when shipping their goods to Switzerland. In this article, we provide key insights into Switzerland’s customs and tax laws, including customs clearance procedures, VAT regulations, exemptions, and issues surrounding VAT registration in Switzerland.
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In recent years, there has been a significant increase in the volume of shipments from Germany and other EU countries into Switzerland. This is due to several factors, including the strength of the Swiss economy, the high purchasing power of Swiss consumers, the appealing tax rates in Switzerland compared to most EU countries, and an overall increase in cross-border trade due to the rise in online shopping and mail-order. For companies shipping goods to Switzerland, it is important to understand the customs and tax implications to ensure compliant and cost-efficient delivery of products.
Switzerland is not a member of the European Union but is closely linked to the EU economically through several bilateral agreements, including the free movement of people, goods, and services. This means that while Switzerland has its own distinct customs laws and import taxes, trade with the EU is highly simplified.
Switzerland also has lower rates of customs duties and sales tax compared to most EU countries. The standard VAT rate in Switzerland is just 7.7% compared to an average of over 20% in the EU. Corporate tax rates and personal income tax rates are also competitive in Switzerland. These factors make Switzerland an attractive market for companies selling goods from Germany and the EU. The lower sales tax rates allow companies to charge a lower final price to the end consumer which leads to increased sales and profitability.
Customs duties and import taxes are often confused but refer to two separate costs. Customs duties are fees levied by the customs authority on goods imported into a country. One aim is to protect domestic industries by placing a premium on foreign goods in the form of the customs duty. Import taxes, on the other hand, refer to domestic taxes applied to foreign goods, such as value added tax (VAT) and excise duties. In Switzerland, both customs duties and import taxes are charged on shipments entering the country, subject to certain conditions and exemptions in some cases.
The exact laws governing customs duties and import tax rates, including exemptions and deductions, are quite complex and constantly evolving. In the following sections we will try to provide an accurate depiction of the most up-to-date rules which apply in both these areas.
Goods crossing the border between the EU and Switzerland must go through customs procedures and clearance. This process involves presenting the necessary documentation to customs authorities, and paying any applicable customs duties and import tax.
In some cases, customs inspections may be conducted to verify the accuracy of the information provided and ensure compliance with customs regulations.
When shipping goods from the EU to Switzerland, in principle the buyer is responsible for paying the customs clearance fees which includes applicable taxes and duties. However, in practice, the responsibility of paying the customs clearance fees can be undertaken by the buyer, seller, or even the specific shipping service provider, depending on the sales agreement. Often, the seller may agree to cover the customs clearance fees as part of the sales price, or charge for it as an additional service.
Swiss customs duties are calculated based on the type of good, its value, and the weight and size of the package. The exact fee can vary significantly, but to give a general indication based on Swiss Post’s rates for customs clearance when delivering goods from the EU to Switzerland:
The above provides a general indication of Swiss customs clearance fees based on the typical charges of a reputable shipping service provider like Swiss Post. In practice, this fee may be added to the price of the goods by the seller and indicated on the invoice as delivery and tariffs.
The EU and Switzerland both use the Harmonised System (HS) for classifying goods, which makes it easier to consistently identify the types of goods being imported into Switzerland from the EU.
In addition to customs duties, commercial goods imported into Switzerland are subject to import sales tax, which is a form of value added tax (VAT). The standard import VAT rate is 7.7% of the taxable value of the shipment. Switzerland also has reduced VAT rates of 2.5% for essential items such as some foodstuffs, books, newspapers, medicines, etc., and a special rate of 3.7% for hotel accommodation and related services. These rates are scheduled to increase to 8.1%, 2.6%, and 3.8% respectively from 1st January 2024.
In principle, all goods which are imported to Switzerland are subject to import sales tax / VAT in Switzerland. However, there are exceptions in certain situations. Previous tax laws on parcel shipments to Switzerland meant that import sales tax was always waived for small consignments with a tax value of 5 Swiss francs or less. In other words, a package of goods taxed at the standard VAT rate of 7.7% was only subject to import tax in Switzerland if its value was CHF 65 or more, and a package of goods taxed at the reduced rate of 2.5% was only subject to import sales tax if its value was CHF 200 or more. Consignments with a value exceeding these thresholds is always subject to import sales tax in Switzerland.
In January 2019, new regulations came into force in Switzerland regarding import sales tax on mail-order deliveries. Under the revised laws, small consignments below the previously discussed limits are still typically exempt from import sales tax.
However, if a company delivers more than a total of CHF 100,000 worth of small consignments in a calendar year, they are required to register for Swiss VAT and charge VAT on all their sales in Switzerland. This then includes both small consignments and large consignments, whereby VAT should be clearly charged and shown on the invoice, and the VAT collected must be handed over to the Swiss tax authorities.
If a company does not exceed the threshold of CHF 100,000 in small consignments, they do not have to register for VAT in Switzerland and their small consignments remain exempt from import sales tax. That said, larger consignments above the threshold values of CHF 65 or CHF 200 (depending on the VAT rate applied) are still always subject to import sales tax. The difference is that the seller does not need to specifically add the VAT to their invoice and are therefore not directly liable for VAT in Switzerland. Instead, the import tax is charged directly to the customer.
The process is as follows: the supplier sends a large consignment to Switzerland; the forwarder/importer must then pay the sales import tax at customs. Therefore, the tax authorities receive the VAT at this stage. Upon delivery to the end customer, the forwarder claims this amount back from the customer plus a processing fee. The end result is that:
In addition to the exemptions given to small consignments, the following are also exempt from import VAT in Switzerland:
Non-Swiss companies that make frequent taxable shipments to Switzerland may benefit from registering for Swiss VAT on a voluntary basis. Voluntary VAT registration means a company can charge Swiss VAT on all its sales to Swiss customers and recover input VAT on costs. This may result in a lower tax burden compared to paying VAT in the country where the company is based, especially considering that Switzerland has a more tax-friendly environment than most EU nations.
Overall, voluntary VAT registration may simplify shipping goods to Switzerland and can reduce costs for high-volume importers. However, it also means complying properly with Swiss tax law which can be complex. To register for Swiss VAT, foreign companies have to appoint a local fiscal representative in Switzerland.
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Higher customs duties and additional taxes apply to “excise goods”, which includes items such as alcoholic beverages, tobacco products, and mineral oils. Anyone planning to ship excise goods to Swiss customers should obtain the latest information on the taxes and duties they will have to pay, as it can be significantly higher than ordinary shipments.
Suppliers and customers alike should both be cautious when it comes to shipping watches, jewellery, or other objects made from precious metals into Switzerland. Swiss customs operate on a “zero tolerance” policy on counterfeit jewellery and watches and takes it as their responsibility to scrutinise any such parcels entering Switzerland. If the purity is found to be inferior to the quality indicated on the shipment, or if the goods are found to be fake, they will be confiscated at customs, even if the customer has already paid for them.
Gifts sent to Switzerland by private individuals are exempt from customs duties if the following conditions are met:
For companies shipping goods to Switzerland who do not exceed the threshold for mandatory VAT registration in Switzerland, a Swiss fiscal representative is not legally required. However, a fiscal representative can provide valuable assistance in navigating Swiss import regulations and ensuring tax compliance. A fiscal representative can:
Companies who exceed the delivery threshold for small consignments, and are therefore obligated to register for VAT in Switzerland, must also enlist the services of a local fiscal representative in Switzerland to help facilitate this process and ensure that they remain legally compliant with Swiss tax.
Using an expert like Nexova AG as your fiscal representative in Switzerland can give you peace of mind that all your customs and tax obligations are fulfilled correctly when shipping your products to Switzerland.
Nexova has extensive experience and knowledge in dealing with Swiss VAT for foreign companies. We remain up to date with the latest legal requirements and ensure that you are always compliant. We also provide individualised advice to help you optimise your tax situation, improve your efficiency, and reduce costs.
We at Nexova AG are happy to represent and advise you with all your fiscal needs in Switzerland. Contact us today to find out how we can help you!