English translation of Article 12 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 12 of the Swiss VAT Act 2010


Public authorities 
  1. With regard to public authorities, autonomous agencies of the Confederation, cantons and communes and other institutions constituted under public law are treated as taxable persons. 
      
  2. Agencies may merge to form a single taxable person. The merger may be enacted at the beginning of any tax period and must be retained for at least one tax period. 
     
  3. A taxable person of a public authority is exempt from tax liability as long as not more than 25,000 CHF of its annual turnover derives from taxable supplies to persons other than public authorities. It will remain exempt from tax liability as long as annual turnover from taxable supplies to persons other than public authorities and to other public authorities does not exceed 100,000 CHF. Turnover is measured by the agreed consideration received before tax is levied. 
     
  4. The Federal Council will determine which supplies made by public authorities qualify as business activity and are therefore deemed taxable. 
 

Swiss VAT Ordinance
 
Article 12 of the Swiss VAT Ordinance 2010 (Taxable person) clarifying Article 12, Section 1 of the Swiss VAT Act 2010
  1. The sub-division of a political unit into departments corresponds to the classification in the financial accounts, to the extent they correspond with the organisational and functional structure.
  2.  
  3. Other public law institutions covered by Article 12, Section 1 of the Swiss VAT Act 2010 are: 
     
    1. domestic and foreign public law corporations such as associations;
    2. public law establishments with their own legal personality;
    3. public law foundations with their own legal personality;
    4. unregistered companies of political units. 
       
  4. For purposes of cross-border collaboration, foreign political units can also be admitted to associations and unregistered companies.
  5.  
  6. An institution in the sense of Section 2 is a taxable person as a whole.

Article 13 of the Swiss VAT Ordinance 2010 (Educational and research cooperation) clarifying Article 12, Section 1 of the Swiss VAT Act 2010

  1. Supplies between educational and research institutes that are partners in an educational and research cooperation are exempt without credit from the tax, provided they take place in the context of the cooperation, regardless of whether the educational and research cooperation is a taxable person for VAT purposes.
  2.  
  3. Educational and research institutes are: 
     
    1. Higher education institutes legally supported by the Confederation and cantons under Article 63a of the Federal Constitution;
    2. Non-profit organizations under Article 3 (j) of the Swiss VAT Act 2010 and political units under Article 12 of the Swiss VAT Act 2010;
    3. Public hospitals, irrespective of their legal form.
  4.  
  5. Private sector enterprises do not qualify as educational and research institutes.

Article 14 of the Swiss VAT Ordinance 2010 (Commercial activities of a political unit) clarifying Article 12, Section 4 of the Swiss VAT Act 2010

Services provided by a political authority that do not count as sovereign activities under Article 3 g of the VAT Law are considered to be commercial and therefore taxable. The following services performed by political authorities are of an entrepreneurial nature and therefore taxable:
  1. Services in the field of radio and television, telecommunications services, and electronic services;
  2.  
  3. Delivery of water, gas, electricity, thermal energy, ethanol, denaturing agents, and similar goods;   
  4.  
  5. Transport of goods and people;
  6.  
  7. Services in harbours and airports;
  8.  
  9. Delivery of new finished goods for sale;
  10.  
  11. Delivery of agricultural products by agricultural departments of political units;
  12.  
  13. Organizing fairs and exhibitions with a commercial character;
  14.  
  15. Operating sports facilities, such as public baths and skating rinks;
  16.  
  17. Storage;
  18.  
  19. Activities of commercial advertising offices;
  20.  
  21. Activities of travel agents;
  22.  
  23. The supplying of factory canteens, staff restaurants, sales offices, and similar establishments;
  24.  
  25. Activities of public notaries;
  26.  
  27. Activities of surveyors' offices;
  28.  
  29. Activities in the field of waste disposal;
  30.  
  31. Activities financed by pre-collected disposal charges based on Article 32abis of the Environmental Act dated 7 October 1983 (USG);
  32.  
  33. Activities  relating to the setting up of traffic centers;
  34.  
  35. Exhaust gas controls;
  36.  
  37. Advertising services.



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

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. 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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