English translation of Article 23 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 23 of the Swiss VAT Act 2010

Supplies exempt from the tax 
  1. If a supply is exempt from the tax under this article, domestic tax is not payable on the supply.

  2. Exempt from the tax are:
     
    1. the supply of goods, unless provided for use or exploitation, that are transported or dispatched directly abroad

    2. the provision for use or exploitation, in particular the leasing or chartering of goods, provided they are transported or dispatched directly abroad and are predominantly used abroad by the recipient of the supply;

    3. the supply of goods that were demonstrably subject to customs control on Swiss territory in connection with a transit procedure (Article 49 CustA), a customs warehousing procedure (Article 50–57 CustA), a temporary admission procedure (Article 58 CustA), or inward processing procedure (Article 59 CustA), or because of storage in a bonded warehouse (Article 62–66 CustA);

    4. the movement or arranging for the movement of goods abroad for reasons unrelated to a supply of goods;

    5. the transport or dispatch of goods in connection with the import of goods and all related supplies as far as the destination to which the goods are to be transported at the time the tax debt is incurred under Article 56; if no tax debt is incurred, the decisive time is governed by Article 69 CustA by analogy;

    6. the transport or dispatch of goods and all related supplies in connection with the export of goods released for free circulation under customs law;

    7. the provision of transport services and ancillary logistic activities, such as loading, unloading, transshipment, clearing or temporary warehousing, abroad or in connection with goods that are under customs control;

    8. the delivery of aircraft to airline companies, the commercial basis aviation in the transport or charter flights operate and exceed their revenue from international flights, those from the domestic air traffic, conversions, repairs and maintenance on aircraft operated by such carriers have acquired as part of a delivery, deliveries, in repair and maintenance of equipment incorporated or used therein; supply of goods and services for the supply of aircraft destined for the immediate needs of these aircraft and their cargo;

    9. the services of intermediaries acting expressly in the name of and on account of third parties, provided that the brokered supply is either exempt from the tax under this article or is effected exclusively abroad; if the brokered supply is effected both on Swiss territory and abroad, that part of the brokerage that relates to supplies abroad or supplies that are exempt from the tax under this article is exempt from the tax;

    10. the supply of services in their own name by travel agents and organisers of events, to the extent they make use of supplies of goods and services by third parties that are provided abroad; if these supplies by third parties are provided both on Swiss territory and abroad, only that part of the service of the travel agent or of the organiser that relates to supplies abroad is exempt from VAT. 


  3. A direct export under paragraph 2(1) is constituted if the good supplied is exported abroad or to an open customs warehouse or bonded warehouse without being used on Swiss territory. In chain transactions, the direct export extends to all suppliers involved. The good supplied may, prior to export, be processed or finished by contractors of the non-taxable customer.

  4. The Federal Council may, in order to safeguard competitive neutrality, exempt transport in cross-border air, rail or bus traffic from the tax.

  5. The Federal Department of Finance (FDF) shall regulate the conditions under which domestic supplies of goods are exempt from VAT when being exported in transit and shall specify the evidence required.
 

Swiss VAT Ordinance

Article 40 of the Swiss VAT Ordinance 2010 (Direct export of goods for consumption or use) clarifying Article 23 Section 2 Subsection 2 of the Swiss VAT Act 2010

Goods are considered to be directly conveyed or dispatched abroad in the sense of Article 23 Section 2 Subsection 67 641.201 Taxes 2 of the Swiss VAT Act 2010 if prior to the export there is no further delivery in Switzerland.

 
Article 41 of the Swiss VAT Ordinance 2010 (Tax exemption of international air traffic) clarifying Article 23 Section 4 of the Swiss VAT Act 2010
 
  1. The following are exempt from the tax: 
    1. Conveyances by air either to or from Switzerland;
    2. Conveyances by air from one foreign airport to another foreign airport crossing Swiss territory. 
       
  2. Domestic legs in international air traffic are exempt from the tax if the flight is interrupted in Switzerland only by a technical stopover or to change to a connecting flight.
     
Article 42 of the Swiss VAT Ordinance 2010 (Tax exemption of international rail traffic) carifying Article 23 Section 4 of the Swiss VAT Act 2010 
  1. Subject to Section 2, conveyances in cross-border rail traffic are exempt from the tax to the extent they are legs for which there is an international ticket. These include:  
    1. Transports on legs either to or from Switzerland;
    2. Transports on domestic legs used in transit to link the departure and the arrival stations located abroad.
       
  2. To fall under the tax exemption, the portion of the ticket price corresponding to the foreign leg must be higher than the VAT not chargeable because of the tax exemption.
     
  3. No tax exemption is granted on the sale of flat price tickets, in particular general season tickets and half price season tickets that are used in whole or part for tax exempt conveyances.
     
Article 43 of the Swiss VAT Ordinance 2010 (Tax exemption of international bus traffic) clarifying Article 23 Section 4 of the Swiss VAT Act 2010
 
  1. Exempt from the tax are conveyancs of persons by bus or coach on legs that:  
    1. pass predominantly over foreign territory; or
    2. are used in transit to link the places of departure and of arrival located abroad.
       
  2. Exempt from the tax are conveyances of persons on purely domestic legs performed solely for the direct carriage of a person to a transport service under Paragraph 1, provided it is invoiced together with the transport service under Section 1. SR 632.10 Appendix SR 941.311

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

Exemptions on exportation

Article 146 of the EU VAT Directive                 

1. Member States shall exempt the following transactions:

(a) the supply of goods dispatched or transported to a destination outside the Community by or on behalf of the vendor;

(b) the supply of goods dispatched or transported to a destination outside the Community by or on behalf of a customer not established within their respective territory, with the exception of goods transported by the customer himself for the equipping, fuelling and provisioning of pleasure boats and private aircraft or any other means of transport for private use;

(c) the supply of goods to approved bodies which export them out of the Community as part of their humanitarian, charitable or teaching activities outside the Community;

(d) the supply of services consisting in work on movable property acquired or imported for the purpose of undergoing such work within the Community, and dispatched or transported out of the Community by the supplier, by the customer if not established within their respective territory or on behalf of either of them;

(e) the supply of services, including transport and ancillary transactions, but excluding the supply of services exempted in accordance with Articles 132 and 135, where these are directly connected with the exportation or importation of goods covered by Article 61 and Article 157(1)(a).

2. The exemption provided for in point (c) of paragraph 1 may be granted by means of a refund of the VAT.

Article 147 of the EU VAT Directive  

1. Where the supply of goods referred to in point (b) of Article 146(1) relates to goods to be carried in the personal luggage of travellers, the exemption shall apply only if the following conditions are met:

(a) the traveller is not established within the Community;

(b) the goods are transported out of the Community before the end of the third month following that in which the supply takes place;

(c) the total value of the supply, including VAT, is more than EUR 175 or the equivalent in national currency, fixed annually by applying the conversion rate obtaining on the first working day of October with effect from 1 January of the following year. However, Member States may exempt a supply with a total value of less than the amount specified in point (c) of the first subparagraph.

2. For the purposes of paragraph 1,

a traveller who is not established within the Communityshall mean a traveller whose permanent address or habitual residence is not located within the Community. In that case permanent address or habitual residencemeans the place entered as such in a passport, identity card or other document recognised as an identity document by the Member State within whose territory the supply takes place.

Proof of exportation shall be furnished by means of the invoice or other document in lieu thereof, endorsed by the customs office of exit from the Community. Each Member State shall send to the Commission specimens of the stamps it uses for the endorsement referred to in the second subparagraph. The Commission shall forward that information to the tax authorities of the other Member States.

Exemptions related to international transport

Article 148 of the EU VAT Directive

Member States shall exempt the following transactions:

(a) the supply of goods for the fuelling and provisioning of vessels used for navigation on the high seas and carrying passengers for reward or used for the purpose of commercial, industrial or fishing activities, or for rescue or assistance at sea, or for inshore fishing, with the exception, in the case of vessels used for inshore fishing, of ships' provisions;

(b) the supply of goods for the fuelling and provisioning of fighting ships, falling within the combined nomenclature (CN) code 8906 10 00, leaving their territory and bound for ports or anchorages outside the Member State concerned;

(c) the supply, modification, repair, maintenance, chartering and hiring of the vessels referred to in point (a), and the supply, hiring, repair and maintenance of equipment, including fishing equipment, incorporated or used therein;

(d) the supply of services other than those referred to in point (c), to meet the direct needs of the vessels referred to in point (a) or of their cargoes;

(e) the supply of goods for the fuelling and provisioning of aircraft used by airlines operating for reward chiefly on international routes;

(f) the supply, modification, repair, maintenance, chartering and hiring of the aircraft referred to in point (e), and the supply, hiring, repair and maintenance of equipment incorporated or used therein;

(g) the supply of services, other than those referred to in point (f), to meet the direct needs of the aircraft referred to in point (e) or of their cargoes.

Article 149 of the EU VAT Directive

Portugal may treat sea and air transport between the islands making up the autonomous regions of the Azores and Madeira and between those regions and the mainland as international transport.

Article 150 of the EU VAT Directive

1. The Commission shall, where appropriate, as soon as possible, present to the Council proposals designed to delimit the scope of the exemptions provided for in Article 148 and to lay down the detailed rules for their implementation.

2. Pending the entry into force of the provisions referred to in paragraph 1, Member States may limit the scope of the exemptions provided for in points (a) and (b) of Article 148.

Exemptions relating to certain Transactions treated as exports

Article 151 of the EU VAT Directive

1. Member States shall exempt the following transactions:

(a) the supply of goods or services under diplomatic and consular arrangements;

(b) the supply of goods or services to international bodies recognised as such by the public authorities of the host Member State, and to members of such bodies, within the limits and under the conditions laid down by the international conventions establishing the bodies or by headquarters agreements;

(c) the supply of goods or services within a Member State which is a party to the North Atlantic Treaty, intended either for the armed forces of other States party to that Treaty for the use of those forces, or of the civilian staff accompanying them, or for supplying their messes or canteens when such forces take part in the common defence effort;

(d) the supply of goods or services to another Member State, intended for the armed forces of any State which is a party to the North Atlantic Treaty, other than the Member State of destination itself, for the use of those forces, or of the civilian staff accompanying them, or for supplying their messes or canteens when such forces take part in the common defence effort;

(e) the supply of goods or services to the armed forces of the United Kingdom stationed in the island of Cyprus pursuant to the Treaty of Establishment concerning the Republic of Cyprus, dated 16 August 1960, which are for the use of those forces, or of the civilian staff accompanying them, or for supplying their messes or canteens. Pending the adoption of common tax rules, the exemptions provided for in the first subparagraph shall be subject to the limitations laid down by the host Member State.

2. In cases where the goods are not dispatched or transported out of the Member State in which the supply takes place, and in the case of services, the exemption may be granted by means of a refund of the VAT.

Article 152 of the EU VAT Directive

Member States shall exempt the supply of gold to central banks.

Exemptions for the supply of services by intermediaries

Article 153 of the EU VAT Directive

Member States shall exempt the supply of services by intermediaries, acting in the name and on behalf of another person, where they take part in the transactions referred to in Chapters 6, 7 and 8, or of transactions carried out outside the Community. The exemption referred to in the first paragraph shall not apply to travel agents who, in the name and on behalf of travellers, supply services which are carried out in other Member States.

Exemptions for transactions relating to international trade

Section 1
 
Custom warehouses, warehouses other than custom warehouses and similar arrangements
Article 154 of the EU VAT Directive

For the purposes of this Section,

warehouses other than customs warehousesshall, in the case of products subject to excise duty, mean the places defined as tax warehouses by Article 4(b) of Directive 92/12/EEC and, in the case of products not subject to excise duty, the places defined as such by the Member States.

Article 155 of the EU VAT Directive

Without prejudice to other Community tax provisions, Member States may, after consulting the VAT Committee, take special measures designed to exempt all or some of the transactions referred to in this Section, provided that those measures are not aimed at final use or consumption and that the amount of VAT due on cessation of the arrangements or situations referred to in this Section corresponds to the amount of tax which would have been due had each of those transactions been taxed within their territory.

Article 156 of the EU VAT Directive

1. Member States may exempt the following transactions:

(a) the supply of goods which are intended to be presented to customs and, where applicable, placed in temporary storage;

(b) the supply of goods which are intended to be placed in a free zone or in a free warehouse;

(c) the supply of goods which are intended to be placed under customs warehousing arrangements or inward processing arrangements;

(d) the supply of goods which are intended to be admitted into territorial waters in order to be incorporated into drilling or production platforms, for purposes of the construction, repair, maintenance, alteration or fitting-out of such platforms, or to link such drilling or production platforms to the mainland;

(e) the supply of goods which are intended to be admitted into territorial waters for the fuelling and provisioning of drilling or production platforms.

2. The places referred to in paragraph 1 shall be those defined as such by the Community customs provisions in force.

Article 157 of the EU VAT Directive

1. Member States may exempt the following transactions:

(a) the importation of goods which are intended to be placed under warehousing arrangements other than customs warehousing;

(b) the supply of goods which are intended to be placed, within their territory, under warehousing arrangements other than customs warehousing.

2. Member States may not provide for warehousing arrangements other than customs warehousing for goods which are not subject to excise duty where those goods are intended to be supplied at the retail stage.

Article 158 of the EU VAT Directive
 
1. By way of derogation from Article 157(2), Member States may provide for warehousing arrangements other than customs warehousing in the following cases:

(a) where the goods are intended for tax-free shops, for the purposes of the supply of goods to be carried in the personal luggage of travellers taking flights or sea crossings to third territories or third countries, where that supply is exempt pursuant to point (b) of Article 146(1);

(b) where the goods are intended for taxable persons, for the purposes of carrying out supplies to travellers on board an aircraft or a ship in the course of a flight or sea crossing where the place of arrival is situated outside the Community;

(c) where the goods are intended for taxable persons, for the purposes of carrying out supplies which are exempt from VAT pursuant to Article 151.

2. Where Member States exercise the option of exemption provided for in point (a) of paragraph 1, they shall take the measures necessary to ensure the correct and straightforward application of this exemption and to prevent any evasion, avoidance or abuse.

3. For the purposes of point (a) of paragraph 1, tax-free shopshall mean any establishment which is situated within an airport or port and which fulfils the conditions laid down by the competent public authorities.

Article 159 of the EU VAT Directive

Member States may exempt the supply of services relating to the supply of goods referred to in Article 156, Article 157(1)(b) or Article 158.

Article 160 of the EU VAT Directive

1. Member States may exempt the following transactions:

(a) the supply of goods or services carried out in the locations referred to in Article 156(1), where one of the situations specified therein still applies within their territory;

(b) the supply of goods or services carried out in the locations referred to in Article 157(1)(b) or Article 158, where one of the situations specified in Article 157(1)(b) or in Article 158(1) still applies within their territory.

2. Where Member States exercise the option under point (a) of paragraph 1 in respect of transactions effected in customs warehouses, they shall take the measures necessary to provide for warehousing arrangements other than customs warehousing under which point (b) of paragraph 1 may be applied to the same transactions when they concern goods listed in Annex V and are carried out in warehouses other than customs warehouses.

Article 161 of the EU VAT Directive

Member States may exempt supply of the following goods and of services relating thereto:

(a) the supply of goods referred to in the first paragraph of Article 30 while they remain covered by arrangements for temporary importation with total exemption from import duty or by external transit arrangements;

(b) the supply of goods referred to in the second paragraph of Article 30 while they remain covered by the internal Community transit procedure referred to in Article 276.

Article 162 of the EU VAT Directive

Where Member States exercise the option provided for in this Section, they shall take the measures necessary to ensure that the intra- Community acquisition of goods intended to be placed under one of the arrangements or in one of the situations referred to in Article 156, Article 157(1)(b) or Article 158 is covered by the same provisions as the supply of goods carried out within their territory under the same conditions.

Article 163 of the EU VAT Directive

If the goods cease to be covered by the arrangements or situations referred to in this Section, thus giving rise to importation for the purposes of Article 61, the Member State of importation shall take the measures necessary to prevent double taxation.

Section 2

Transactions exempted with a view to export and in the frame work of trade between the Member States

Article 164 of the EU VAT Directive

1. Member States may, after consulting the VAT Committee, exempt the following transactions carried out by, or intended for, a taxable person up to an amount equal to the value of the exports carried out by that person during the preceding 12 months:

(a) intra-Community acquisitions of goods made by the taxable person, and imports for and supplies of goods to the taxable person, with a view to their exportation from the Community as they are or after processing;

(b) supplies of services linked with the export business of the taxable person.

2. Where Member States exercise the option of exemption under paragraph 1, they shall, after consulting the VAT Committee, apply that exemption also to transactions relating to supplies carried out by the taxable person, in accordance with the conditions specified in Article 138, up to an amount equal to the value of the supplies

carried out by that person, in accordance with the same conditions, during the preceding 12 months.

Article 165 of the EU VAT Directive

Member States may set a common maximum amount for transactions which they exempt pursuant to Article 164.

Section 3

Provsions common to Sections 1 and 2

Article 166 of the EU VAT Directive

The Commission shall, where appropriate, as soon as possible, present to the Council proposals concerning common arrangements for applying VAT to the transactions referred to in Sections 1 and 2.

 
 
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