English translation of Article 18 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 18 of the Swiss VAT Act 2010

Principle
  1. Domestic tax shall be levied on supplies made by taxable persons on Swiss territory for consideration; they are taxable unless this Act provides otherwise.  

  2. In the absence of any supply, the following cash flows in particular do not qualify as consideration: 
    a. subsidies and other public law contributions, even if they are paid on the basis of a public service agreement or a special agreement pursuant to Article 46 paragraph 2 of the Federal Constitution; 
    b. funds that tourist offices receive exclusively from public law tourist charges and which they employ on behalf of public authorities for the public good;
    c. contributions from cantonal water, sewage or waste funds to waste disposal plants or waterworks; 
    d. donations; 
    e. contributions to businesses, in particular interest free loans, recapitalisation payments and written-off debts; 
    f.  dividends and other profit shares;  
    g. contractually or legally regulated cost sharing payments that are paid by an organisational unit, in particular by a fund, to participants in a branch of the industry
    h. deposits in particular on packaging and containers; 
    i. payments for damages and compensation; 
    j. remuneration for board members' and trustees’ fees, remuneration of authorities or pay;
    k. reimbursements, contributions to and allowances for supplies of goods delivered abroad that are exempt from the tax under Article 23 paragraph 2 number 1 
    l. charges, contributions or other payments received for state activities. 
 


 
Swiss VAT Ordinance
 
Article 26 of the Swiss VAT Ordinance 2010 (Supplies to closely related persons) clarifying Article 18 Section 1 of the Swiss VAT Act 2010

The rendering of supplies to closely related persons constitutes a supply relationship. Assessment is governed by Article 24 Section 2 of the Swiss VAT Act 2010.

Article 27 of the Swiss VAT Ordinance 2010 (Pre-collected disposal charges) clarifying Article 18 Section 1 of the Swiss VAT Act 2010

Private organizations in the sense of Article 32abis USG4 render through their activities services for manufacturers and importers. The pre-collected waste charges are consideration for these services.

Article 28 of the Swiss VAT Ordinance 2010 (Cross-border secondment of employees within a group) clarifying Article 18 of the Swiss VAT Act 2010

A supply relationship does not exist in the cross-border secondment of employees within a group, if:

a. a foreign employer employs an employee in a deployment operation in Switzerland belonging to the same group or an employer employs an employee in a foreign deployment operation belonging to the same group;

b. the employee renders the work performance for the deployment operation but retains the employment contract with the seconding enterprise; and

c. the wages, social security contributions and related expenses are charged by the seconding employer to the deployment operation without mark-up.   

Article 29 of the Swiss VAT Ordinance 2010 (Subsidies and other public law contributions) clarifying Article 18 Section 2 (a) of the Swiss VAT Act 2010

Subsidies and other public law contributions are specifically amounts paid by political units as:

a. Financial assistance in the sense of Article 3 Section 1 of the Subsidies Act dated 5 October 1990 (SuG);

b. Compensation in the sense of Article 3 Section 2 (a) SuG, provided a supply relationship exists;

c. Research contributions, provided the political unit does not have an exclusive right to the results of the research;

d. Cash flows comparable with a–c that are paid under cantonal and communal law.

Article 30 of the Swiss VAT Ordinance 2010 (Remittance of cash flows that do not constitute considerations) clarifying Article 18 Section 2 of the Swiss VAT Act 2010

  1. Cash flow remittances that do not constitute considerations under Article 18 Paragraph 2 of the Swiss VAT Act 2010, in particular within educational and research co-operations, are not subject to the tax.

  2. The input tax deduction under Article 33 Section 2 of the Swiss VAT Act 2010 is reduced at the last payment recipient.
 

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

Article 2 (1) of the EU VAT Directive
  1. The following transactions shall be subject to VAT:  

    a. the supply of goods for consideration within the territory of a Member State by a taxable person acting as such;
     
    b. the intra-Community acquisition of goods for consideration within the territory of a Member State by:
    (i) a taxable person acting as such, or a non-taxable legal person, where the vendor is a taxable person acting as such who is not eligible for the exemption for small enterprises provided for in Articles 282 to 292 and who is not covered by Articles 33 or 36;

    (ii) in the case of new means of transport, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1), or any other nontaxable person;

    (iii) in the case of products subject to excise duty, where the excise duty on the intra-Community acquisition is chargeable, pursuant to Directive 92/12/EEC, within the territory of the Member State, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1);

    c. the supply of services for consideration within the territory of a Member State by a taxable person acting as such;

    d. the importation of goods.

  2. [...]
 

Article 3 of the EU VAT Directive

  1. By way of derogation from Article 2(1)(b)(i), the following transactions shall not be subject to VAT: 

    1. the intra-Community acquisition of goods by a taxable person or a non-taxable legal person, where the supply of such goods within the territory of the Member State of acquisition would be exempt pursuant to Articles 148 and 151;

    2. the intra-Community acquisition of goods, other than those referred to in point (a) and Article 4, and other than new means of transport or products subject to excise duty, by a taxable person for the purposes of his agricultural, forestry or fisheries business subject to the common flat-rate scheme for farmers, or by a taxable person who carries out only supplies of goods or services in respect of which VAT is not deductible, or by a non-taxable legal person.

  2. Point (b) of paragraph 1 shall apply only if the following conditions are met: 
     
    1. during the current calendar year, the total value of intra-Community acquisitions of goods does not exceed a threshold which the Member States shall determine but which may not be less than EUR 10 000 or the equivalent in national currency; 

    2. during the previous calendar year, the total value of intra- Community acquisitions of goods did not exceed the threshold provided for in point (a).

    The threshold which serves as the reference shall consist of the total value, exclusive of VAT due or paid in the Member State in which dispatch or transport of the goods began, of the intra-Community acquisitions of goods as referred to under point (b) of paragraph 1.

  3. Member States shall grant taxable persons and non-taxable legal persons eligible under point (b) of paragraph 1 the right to opt for the general scheme provided for in Article 2(1)(b)(i). Member States shall lay down the detailed rules for the exercise of the option referred to in the first subparagraph, which shall in any event cover a period of two calendar years. 

Article 4 of the EU VAT Directive

In addition to the transactions referred to in Article 3, the following transactions shall not be subject to VAT:

  1. the intra-Community acquisition of second-hand goods, works of art, collectors' items or antiques, as defined in points (1) to (4) of Article 311(1), where the vendor is a taxable dealer acting as such and VAT has been applied to the goods in the Member State in which their dispatch or transport began, in accordance with the margin scheme provided for in Articles 312 to 325; 

  2. the intra-Community acquisition of second-hand means of transport, as defined in Article 327(3), where the vendor is a taxable dealer acting as such and VAT has been applied to the means of transport in the Member State in which their dispatch or transport began, in accordance with the transitional arrangements for second-hand means of transport;

  3. the intra-Community acquisition of second-hand goods, works of art, collectors' items or antiques, as defined in points (1) to (4) of Article 311(1), where the vendor is an organiser of sales by public  auction, acting as such, and VAT has been applied to the goods in the Member State in which their dispatch or transport began, in accordance with the special arrangements for sales by public auction.

 
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