English translation of Article 107 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 107 of the Swiss VAT Act 2010

Federal Council 

  1. The Federal Council:
     
    a. regulates the relief from VAT for beneficiaries under Article 2 of the Host State Act of 22 June 2007 [SR 192.12] who are exempt from liability for tax; 

    b.determines the conditions that persons with their domicile or place of business situated abroad must satisfy in order to be eligible for a refund of VAT levied on Swiss territory on supplies made to them or on their imports that are covered by reciprocal law of the land in which they have their domicile or place of business; in principle the same requirements apply as for domestic taxable persons in respect of the input tax deduction.

  2. The Federal Council may issue provisions departing from this Act concerning the taxation of turnovers on imports of gold coins and pure gold.

  3. The Federal Council will issue the implementing regulations.


Swiss VAT Ordinance

Article 44 of the Swiss VAT Ordinance 2010 (Tax exempt turnovers in gold coins and fine gold) clarifying Article 107 Section 2 of the Swiss VAT Act 2010

1. The following turnovers are exempt from the tax:

a. state minted gold coins with customs tariff numbers 7118.9010 and 9705.00007;

 
b. bank gold under Article 144a Sections 1 (a) and 2 of the Precious Metal Control Ordinance dated 8 May 1934;
 
c. bank gold in the form of granules with a minimum standard of 995 per mille, which have been packed and sealed by an accredited examiner-smelter or in another form accepted by the Federal Finance Department (EFD) with a minimum standard of 995 per mille;
 
d. unprocessed or semi-finished gold that is destined for refining or recovery;
 
e. gold in the form of clippings and scrap.

2. Alloys, with two or more percent by weight gold or, if platinum is contained therein, with more gold than platinum also constitute gold in the sense of Section 1 (d) and (e).

Article 61 of the Swiss VAT Ordinance 2010 (Input tax deduction for gold coins and fine gold) clarifying Article 107 Section 2 of the Swiss VAT Act 2010

The tax on deliveries of goods and services used for turnovers under Article 44 and imports under Article 113 (g) can be deducted as input tax.

Article 143 (Entitlement to claim tax relief) clarifying Article 107 Section 1 (a) of the Swiss VAT Act 2010

1. Institutional and individual beneficiaries are entitled to claim relief from VAT.

2. Institutional beneficiaries are:

a. Beneficiaries under Article 2 Section 1 GSG26 who are exempt from the indirect taxes based on an international treaty, an agreement concluded with the Federal Council for exemption from the indirect taxes, or a decision of the Federal Department of Foreign Affairs (EDA) under Article 26 Section 3 GSG;

 
b. Beneficiaries under Article 2 Section 1 GSG domiciled abroad to the extent they are exempt from the indirect taxes by their foundation deeds, a protocol concerning the privileges and immunities, or other international treaty agreements.  

3. Individual beneficiaries are:

a. Heads of state and government during the time they actually exercise an official function in Switzerland and persons in their entourage who enjoy diplomatic status;

 
b. Diplomatic representatives, consular officials, and persons in their entourage, provided such enjoy and the same diplomatic status as the former in Switzerland;
 
c. High officials of institutional beneficiaries under Section 2 (a), who enjoy diplomatic status, and the persons in their entourage, to the extent they enjoy the same diplomatic status in Switzerland, if they are exempt from the indirect taxes on the basis of an agreement between the Federal Council or the EDA and the institutional beneficiaries in question or on a unilateral decision of the Federal Council or of the EDA;
 
d. Delegates to international conferences, who enjoy diplomatic status, if the international conference they are attending is itself exempt from the indirect taxes in accordance with Section 2 (a);
 
e. Persons carrying out an international mandate under Article 2 Section 2 (b) GSG, who enjoy diplomatic status in Switzerland and are exempt from the indirect taxes on the basis of a decision of the Federal Council and the persons in their entourage, provided such enjoy the same diplomatic status.

4. Swiss citizens have no claim to tax relief.

5. Relief from VAT is effected by tax exemption at the source under Articles 144 and 145 and, in exceptional cases, by refund under Article 146.

Article 144 of the Swiss VAT Ordinance 2010 (Tax exemption) clarifying Article 107 Section 1 (a) of the Swiss VAT Act 2010

1. Exempt from the tax are:

a. the provision of goods and services in Switzerland by taxable persons to institutional and individual beneficiaries;

 
b. the acquisition of services from enterprises with their place of business abroad by institutional and individual beneficiaries.

2. The tax exemption applies only for deliveries and services:

a. to individual beneficiaries if they are exclusively for personal use;

 
b. to institutional beneficiaries if they are exclusively for official use.

Article 145 of the Swiss VAT Ordinance 2010 (Conditions for the tax exemption) clarifying Article 107 Section 1 (a) of the Swiss VAT Act 2010

1. An institutional beneficiary who wishes to claim tax exemption must before every acquisition of goods and services certify on the official form that these goods and services acquired are for official use.

2. An individual beneficiary who wishes to claim tax exemption must, before every acquisition of goods and services, have certified by the institutional beneficiary to which the person belongs, on the official form, that the person enjoys the status under Article 143 Section 3, which confers entitlement to tax free acquisition. The individual beneficiary must hand over the official form signed in their own hand to the supplier and identify himself or herself on every acquisition of goods and services with the identification card issued by the competent federal authority.

3. Tax exemption under Article 144 Section 1 (a) can be claimed only if the effective acquisition price for the goods and services indicated on the invoice or an equivalent document is at least 100 francs, including tax. This minimum amount does not apply for telecommunications and electronic services under Article 10 and for deliveries of water in pipes, gas and electricity by utilities.

4. The conditions under Sections 1–3 for claiming tax exemption do not apply for acquisitions of motor fuel, for which the institutional or the individual beneficiary can claim exemption from the mineral oil tax based on Articles 26–28 of the Mineral Oil Ordinance dated 20 November 1996, on Articles 30 and 31 of the Ordinance dated 23 August 1989 concerning customs privileges of diplomatic missions in Bern and of consular posts in Switzerland and of Articles 28 and 29 of the Ordinance dated 13 November 1985 concerning customs privileges of international organisations, of states in their relations with these organisations and of special missions of foreign states. In this case the supplier must be able to prove that the EZV has not levied the mineral oil tax or has refunded it.

Article 146 (Tax refund) clarifying Article 107 Section 1 (a) of the Swiss VAT Act 2010

1. In justified cases the Federal Tax Authorities can on application refund tax amounts already paid for which a claim to tax relief exists; it can, in consultation with the EDA, charge a processing fee for this service.

2. For the tax refund Article 145 Section 3 applies by analogy.

3. An institutional beneficiary cannot make more than two applications for tax refund per calendar year. The official form must be used.

4. Individual beneficiaries cannot make more than one application for a tax refund per calendar year. The applications of the individual persons are to be collected by the organisation to which they belong for submission once annually.

5. The Federal Tax Authorities can, in consultation with the EDA, set a minimum refund amount per application. No payment interest is paid on the refund amounts.

Article 147 of the Swiss VAT Ordinance 2010 (Retention obligation) clarifying Article 107 Section 1 (a) of the Swiss VAT Act 2010

The taxable person must retain in full the originals of the official forms used, together with the other vouchers, in accordance with Article 70 Section 2 of the Swiss VAT Act 2010. For electronically transmitted and stored official forms Articles 122–125 apply by analogy.

Article 148 of the Swiss VAT Ordinance 2010 (Input tax deduction) clarifying Article 107 Section 1 (a) of the Swiss VAT Act 2010

The tax on the provision of goods and services and the imports of goods and services that are used to effect tax free provisions to institutional and individual beneficiaries can be deducted as input tax.

Article 149 of the Swiss VAT Ordinance 2010 (Ex-post tax collection and infringements) clarifying Article 107 Section 1 (a) of the Swiss VAT Act 2010

1. If the conditions for tax exemption under Articles 144 and 145 are not given or subsequently lapse, in cases of tax exemption under Article 144 Section 1 (a) the institutional or the individual beneficiary is obliged to pay the taxable person the amount accruing on the tax. If this amount is not paid, it is due from the taxable person to the extent this person is at fault. Institutional and individual beneficiaries are obliged to pay the tax subsequently on the acquisition of services from enterprises with their place of business abroad.

2. The provisions of the Vienna Conventions dated 18 April 1961 on Diplomatic Relations and dated 24 April 1963 on Consular Relations and of the Headquarters Agreement are reserved.

Article 150 of the Swiss VAT Ordinance 2010 (Voluntary taxation of supplies exempt without credit) clarifying Article 107 Section 1 (a) of the Swiss VAT Act 2010

The Federal Tax Authorities can approve the voluntary taxation of the goods and services referred to in Article 21 Section 2 Subsections 20 and 21 of the Swiss VAT Act 2010, without the value of the land, provided they have been rendered to institutional beneficiaries under Article 143 Section 2 lit a, regardless whether the institutional beneficiary is liable for tax in Switzerland or not. This option is limited to properties and parts of properties used for administrative purposes, in particular for offices, conference rooms, stores, parking places, or which are foreseen for the residence of the head of a diplomatic mission, a permanent mission or other representative in inter-governmental organisations or of a consular post.

Article 151 of the Swiss VAT Ordinance 2010 (Persons entitled to claim) clarifying Article 107 Section 1 (b) of the Swiss VAT Act 2010

1. Entitlement to refund of the taxes incurred under Article 28 Section 1 (a) and (c) of the Swiss VAT Act 2010 is granted to persons who import goods or have supplies rendered in Switzerland for consideration and also:

a. have their place of residence, of business or permanent establishment abroad;

b. are not a taxable person in Switzerland;
 
c. do not render supplies in Switzerland subject to Section 2; and
 
d. prove to the Federal Tax Authorities their business character in the state of their residence, of their place of business or of the permanent establishment.

2. The entitlement to tax refund remains intact if the person only:

a. arranges transports, which are exempt from the tax under Article 23 Section 2 Subsections 5–7 of the Swiss VAT Act 2010; or

 
b. renders services that are subject to the acquisition tax.

3. Refund of the tax is conditional on the state of residence or of place of business or of the permanent establishment of the applicant enterprise granting a corresponding reciprocal right.

Article 152 (Reciprocal right) clarifying Article 107 Section 1 (b) of the Swiss VAT Act 2010

1. Reciprocal right is deemed to be given if:

a. enterprises with their place of residence or place of business in Switzerland have the right to claim refunds in the foreign state concerned with the VAT paid on goods and services acquired there that in scope and restrictions is commensurate with the right of input tax deduction that enterprises resident in the foreign state enjoy;

 
b. in the foreign state concerned a tax comparable with the Swiss VAT is not levied; or
 
c. in the foreign state concerned a different type of sales tax from the Swiss VAT is imposed, which affects enterprises with their place of residence or place of business in the foreign state in the same way as enterprises with their place of residence of place of business in Switzerland.

2. The Federal Tax Authorities maintain a list of the states with which a reciprocal right declaration has been exchanged under Section 1 (a). 107   

Article 153 of the Swiss VAT Ordinance 2010 (Scope of the tax refund) clarifying Article 107 Section 1 (b) of the Swiss VAT Act 2010

1. The tax refund for the VAT paid in Switzerland is commensurate in scope and limitations with the right of input tax deduction under Articles 28–30 of the Swiss VAT Act 2010.

2. Travel agents and organisers of events with their place of business abroad are not entitled to refunds of the taxes which have been invoiced to them in Switzerland for the acquisition of deliveries and services that they charge on to customers.

3. Repayable taxes are refunded only if their amount in a calendar year reaches at least 500 francs.

Article 154 of the Swiss VAT Ordinance 2010 (Refund period) clarifying Article 107 Section 1 (b) of the Swiss VAT Act 2010

The application for a refund is to be made within six months of the end of the calendar year in which an invoice supporting the claim for refund was issued for the supply rendered.

Article 155 of the Swiss VAT Ordinance 2010 (Procedure) clarifying Article 107 Section 1 (b) of the Swiss VAT Act 2010

1. The application for a tax refund is to be addressed to the Federal Tax Authorities with the suppliers’ original invoices or with the EZV’s assessment advice. The original invoices must meet the requirements under Article 26 Section 2 of the Swiss VAT Act 2010 and be in the name of the applicant.

2. The Federal Tax Authorities’s form is to be used for the application.

3. The applicant must appoint a representative with a place of residence or of business in Switzerland.

4. The tax displayed on cash vouchers cannot be refunded.

5. The Federal Tax Authorities can demand further details and documentation.

Article 156 of the Swiss VAT Ordinance 2010 (Refund interest) clarifying Article 107 Section 1 (b) of the Swiss VAT Act 2010

If the tax refund is paid out later than 180 days after receipt of the complete application by the Federal Tax Authorities, refund interest set by the EFD is paid for the period from the 181st day until payment, provided the relevant state grants reciprocal rights.  


Corresponding Article(s) of the EU VAT Directive (Recast)

Article 403 of the EU VAT Directive

Transitional arrangements for the taxation of trade between Member StatesThe Council shall, acting in accordance with Article 93 of the Treaty, adopt Directives appropriate for the purpose of supplementing the common system of VAT and, in particular, for the progressive restriction or the abolition of derogations from that system.
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