English translation of Article 10 of the Swiss VAT Act 2010

This page contains an English translation of the below Article of the revised Swiss VATA 2010 and is part of a web based Swiss VATA 2010 commentary published in German. Should you require qualified written legal advice on cross-border transactions potentially triggering Swiss VAT  from a Swiss VAT lawyer please do not hesitate to contact: Harun Can


Article 10 of the Swiss VAT Act 2010

Principle
  1. Any person, irrespective of legal form, purpose and profit intention, is liable to the tax if such person operates a business and is not exempt from tax liability under paragraph 2. A person operates a business if he: 
    1. independently carries out a professional or commercial activity with the aim of sustainably earning income from the supply of services or goods; and  

    2. acts towards third parties under his own name.
  2.  
  3. Any person is exempt from tax liability under paragraph 1 who:  
     
    1. generates annual turnover from taxable supplies of less than 100,000 CHF on Swiss territory, unless such person waives this exemption; turnover is measured by the agreed consideration received before tax is levied.
    2.  
    3. operates a business based abroad that makes supplies on Swiss territory which are exclusively subject to the acquisition tax (Article 4549); persons however are not exempt from tax liability if they operate a business based abroad that supplies telecommunication or electronic services on Swiss territory to recipients who are not liable for VAT; 
    4.  
    5. as a non-profit, voluntarily-run sporting or cultural association or as a charitable organisation generates on Swiss territory a turnover from taxable supplies of less than 150,000 CHF, unless such person has waived the exemption from tax liability; turnover is measured by the agreed consideration received before tax is levied.
     
  4. Places of business on Swiss territory and domestic permanent establishments together constitute a single taxable entity.

 

Swiss VAT Ordinance

Article 7 of the Swiss VAT Ordinance 2010 (Permanent establishments of foreign enterprises) specifying Article 10 of the Swiss VAT Act 2010

All permanent establishments (also referred to as branch) in Switzerland of an enterprise domiciled abroad count together as a single independent taxable entity.

Article 8 of the Swiss VAT Ordinance 2010 (Tax liability) specifying Article 10 Section 1 and 11 of the Swiss VAT Act 2010

  1. Only those persons can be liable for tax who operate a business and: 
     
    1. render services in Switzerland; or 
    2. of which the place of business or a permanent establishment, or in the absence of such a place of business or such a permanent establishment the place of residence or the place from which it conducts business, is located in Switzerland.
  2.  
  3. Supplies, which are deemed to be provided in Switzerland based on a customs clearance and taxation declaration under Article 3, are also supplies provided in Switzerland.

Article 9 of the Swiss VAT Ordinance 2010 (Acquisition, holding and sale of participations) specifying Article 10 Section 1 of the Swiss VAT Act 2010

The acquisition, holding and sale of participations in the sense of Article 29 Sections 2 and 3 of the Swiss VAT Act 2010 constitutes a business activity in the sense of Article 10 Section 1 of the Swiss VAT Act 2010.

Article 10 of the Swiss VAT Ordinance 2010 (Telecommunications and electronic services) specifying Article 10 Section 2 (b) of the Swiss VAT Act 2010

  1. Telecommunications and electronic services are in particular: 
     
    1. Radio and television services; 
    2. The provision of access authorisation, in particular to fixed line and mobile networks and to satellite communication and to other information networks; 
    3. The provision and commitment of data transfer capacity; 
    4. The provision of websites, webhosting, teleservicing of programmes and equipment; 
    5. The electronic provision of software and its updating; 
    6. The electronic provision of images, texts and information and the provision of databases; 
    7. The electronic provision of music, films and games, including games of chance and lotteries.
     
  2. Telecommunications or electronic services do not include in particular: 
     
    1. The mere communication between the persons providing and receiving the service by wire, wireless, optical or other electro-magnetic media; 
    2. Educational services in the sense of Article 21 Section 2 Subsection 11 VAT Act in interactive form; 
    3. The mere concession for use of precisely designated equipment or equipment parts for the sole use of the lessee for the transmittal of data.

Corresponding Article(s) of the EU VAT Directive (Recast) 2006/112/EC (as of January 2010)

Taxable Persons

Article 9 of the EU VAT Directive

1.‘Taxable personshall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity. Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as economic activity. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.

2. In addition to the persons referred to in paragraph 1, any person who, on an occasional basis, supplies a new means of transport, which is dispatched or transported to the customer by the vendor or the customer, or on behalf of the vendor or the customer, to a destination outside the territory of a Member State but within the territory of the Community, shall be regarded as a taxable person.

Article 10 of the EU VAT Directive

The condition in Article 9(1) that the economic activity be conducted ‘independentlyshall exclude employed and other persons from VAT in so far as they are bound to an employer by a contract of employment or by any other legal ties creating the relationship of employer and employee as regards working conditions, remuneration and the employer's liability.

Article 11 of the EU VAT Directive

After consulting the advisory committee on value added tax (hereafter, the ‘VAT Committee), each Member State may regard as a single taxable person any persons established in the territory of that Member State who, while legally independent, are closely bound to one another by financial, economic and organisational links.

A Member State exercising the option provided for in the first paragraph, may adopt any measures needed to prevent tax evasion or avoidance through the use of this provision.

Article 12 of the EU VAT Directive

  1. Member States may regard as a taxable person anyone who carries out, on an occasional basis, a transaction relating to the activities referred to in the second subparagraph of Article 9(1) and in particular one of the following transactions: 
     
    1.  the supply, before first occupation, of a building or parts of a building and of the land on which the building stands;
    2. the supply of building land.
  2.  
  3. For the purposes of paragraph 1(a), ‘building’ shall mean any structure fixed to or in the ground. Member States may lay down the detailed rules for applying the criterion referred to in paragraph 1(a) to conversions of buildings and may determine what is meant by the land on which a building stands.

    Member States may apply criteria other than that of first occupation, such as the period elapsing between the date of completion of the building and the date of first supply, or the period elapsing between the date of first occupation and the date of subsequent supply, provided that those periods do not exceed five years and two years respectively.

  4. For the purposes of paragraph 1(b), ‘building land’ shall mean any unimproved or improved land defined as such by the Member States.

Article 13 of the EU VAT Directive

  1. States, regional and local government authorities and other bodies governed by public law shall not be regarded as taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with those activities or transactions. 

    However, when they engage in such activities or transactions, they shall be regarded as taxable persons in respect of those activities or transactions where their treatment as non-taxable persons would lead to significant distortions of competition.

    In any event, bodies governed by public law shall be regarded as taxable persons in respect of the activities listed in Annex I, provided that those activities are not carried out on such a small scale as to be negligible.
  2.  
  3. Member States may regard activities, exempt under Articles 132, 135, 136, 371, 374 to 377, and Article 378(2), Article 379(2), or Articles 380 to 390, engaged in by bodies governed by public law as activities in which those bodies engage as public authorities.


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