Switzerland and the Principality of Liechtenstein are not member states of the European Union. As a result, European regulations such as the Customs Code and the Directive on the VAT system (VAT Directive; Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax) do not apply to consignments to either country. Therefore, schemes such as the Mini One-Stop-Shop (MOSS) for services in the field of telecommunication, broadcasting services and electronically supplied services do not apply.
On 1 January 2019, important changes will come into force for consignments to Swiss domiciled clients.
Until now, under Swiss law, mail orders are considered to be performed where the shipment begins. For example, if a parcel is sent from Berlin to Zurich, the original mail order is regarded as being made outside of Switzerland and does not cause the supplier to be liable for VAT, provided only such services have been rendered from Germany. This applies regardless of the chosen delivery terms. Even the Incoterm “DDP” (Delivered Duty Paid) has no effect on this.
However, as in other European countries, Switzerland does not only levy domestic valued added tax, for which the Swiss Federal Tax Administration is responsible, it also levies value added tax on the import (known as import VAT). This is enforced by the Swiss Federal Customs Administration. According to this principle, all goods which are released into free circulation from abroad are subject to import VAT, unless an exemption is provided for under the law. An example of such an exemption is when the amount of import VAT is too low, i.e. under CHF 5 (in the following such imports will be referred to as “small consignments”). This means that until the end of 2018, small consignments from abroad to Switzerland will not be subject to either domestic or import VAT. The Swiss legislature has now changed this with its last VAT reform.
This will result in a significant change as of 1 January 2019: anyone who sends small consignments to Switzerland in 2018, and generates at least CHF 100,000 turnover by doing so, must imperatively register as a VAT payer with the Swiss Federal Tax Administration as of 1 January 2019. As a consequence, all taxable mail-order companies must pay tax on all small consignments as well as large consignments from abroad to Switzerland (a tax rate of 2.5% or 7.7% applies depending of the type of goods). If the Swiss Federal Customs Administration levies an import VAT, the taxable mail-order company can, in turn, claim this tax as input VAT. This measure is intended to ensure that consignments to final consumers are correctly taxed. A mail-order company established abroad which is registered in the VAT register, must report VAT to the Swiss Federal Tax Administration on a quarterly basis. It must also designate a tax representative in Switzerland and provide security. However, a company’s tax liability also brings it significant advantages: for example, processing returns is made considerably easier and consignments can be combined upon import, i.e. consignments to various buyers can be declared on one customs declaration, thus keeping clearance costs low.
Companies which meet the requirements for VAT liability must register with the Swiss Federal Tax Administration independently at: https://www.estv.admin.ch/estv/en/home/mehrwertsteuer/dienstleistungen/formulare-online/anmeldung-bei-der-mwst.html
Further information on mail-order taxation and correct border clearance can be found here: https://www.estv.admin.ch/estv/en/home/mehrwertsteuer/fachinformationen/revmwstg/regelung-fuer-den-versandhandel.html.
The Swiss Federal Taxation Administration is of course available to answer individual enquiries in German, French, Italian and English. You can get in touch with the Swiss Federal Tax Administration using the contact form on its website: https://www.estv.admin.ch/estv/en/home/die-estv/kontaktformulare/kontakt-mehrwertsteuer.html.
 For the sake of simplicity, the following only makes reference to Switzerland. It naturally also applies to the Principality of Liechtenstein and the German commune of Büsingen am Hochrhein.
This is a guest article written by the Swiss Federal Tax Administration.