English translation of Article 32 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 32 of the Swiss VAT Act 2010

Subsequent input tax deduction 

  1. If the conditions for input tax deduction arise later (subsequent input tax deduction), the input tax deduction may be made in the filing period in which the conditions arose. The input tax not deducted earlier, including the portion corrected for own use, may be deducted. 

  2. If the good or the service was put into use in the time between receipt or import of the supply and the occurrence of the conditions for the input tax deduction, the deductible input tax is limited to the fair value of the good or the service. To determine the fair value, the input tax amount is reduced for every year that has expired by 20% for movable goods and for services, and by a 5% for immovable goods. The method of accounting is of no significance. The Federal Council may, in justified cases, stipulate departures from the depreciation rules. 

  3. If a good is used only temporarily outside the business activity or for a business activity not entitling the taxable person to make an input tax deduction, the input tax deduction must be corrected based on the amount of the tax that would be due on the amount of hire that an independent third person would charge therefore.


Article 72 of the Swiss VAT Ordinance 2010 (Principles) clarifying Article 32 of the Swiss VAT Act 2010



1. The input tax deduction can be corrected in full on goods and services not taken into use.

2 .The input tax deduction can be corrected on goods and services taken into use that are on hand and have fair market value at the time the requirements for the input tax deduction are fulfilled. For services in the fields of consulting, accounting, staff recruitment, management and advertising it is assumed that at the time of their acquisition they were exhausted and are no longer given. 77 641.201

3. In the case of self-manufactured goods, a flat-rate surcharge of 33 per cent can be levied on the input taxes on materials for the use of the infrastructure and any third party work on semi-finished goods. The effective proof of input taxes applicable to use of the infrastructure is excluded.

4. If the requirements for the input tax deduction eventuate only partially, the correction can be made only to the degree of use entitling the taxpayer to the input tax deduction.

Article 73 of the Swiss VAT Ordinance 2010 (Determination of the fair value) clarifying Article 32 Section 2 of the Swiss VAT Act 2010

1. The fair market value is to be calculated on the basis of the acquisition cost; in the case of real estate excluding the value of the land and of the value enhancing expenditures.The value maintenance expenditures are not to be considered, however. Value maintenance expenditures are such that serve only to maintain the value of goods and their ability to function, in particular service, maintenance, operating, repair and renovation costs.

2. In determining the fair market value of goods and services taken into use, in the first tax period of use the loss in value is to be considered for the entire tax period. In the last tax period not completed, on the other hand, no amortisation is to be undertaken, unless the change in use occurs on the last day of the tax period.

Article 74 of the Swiss VAT Ordinance 2010 (Major renovations of property) clarifying Article 32 of the Swiss VAT Act 2010

If the renovation costs in a construction phase exceed in total 5 per cent of the insurance value of the building prior to renovation, the entire input tax deduction can be corrected, regardless of whether the costs are for value enhancing or maintenance expenditures. 6th Section: Reduction of the input tax deduction (Article 33 Section 2 of the Swiss VAT Act 2010).

Article 165 of the Swiss VAT Ordinance 2010 (De-taxation) clarifying Article 32 of the Swiss VAT Act 2010

The provisions concerning de-taxation are not applicable for:

a. cash flows not qualifying as considerations (Article 18 Section 2 of the Swiss VAT Act 2010), which, according to the new law under Article 33 Section 2 of the Swiss VAT Act 2010, no longer result in a reduction of the input tax deduction; 
b. own supplies taxed as own use for construction purposes under Article 9 Section 2 of the of the Swiss VAT Act 2010 dated 2 September 1999.

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

There is no corresponding provision.

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