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Switzerland

23 June 2022

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Swiss Tax Administration Provides Guidance on VAT Refunds for Foreign Companies

On 21 June 2022, the Swiss Federal Tax Administration published guidance on VAT refunds for foreign companies in the form of a Q&A. The guidance also includes links to the relevant forms and other information.

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VAT refund to companies with their domicile on foreign territory

As a recipient of services with your place of residence, place of business or permanent establishment abroad, have you incurred VAT expenses for your business activities in Switzerland and would like to have them repaid? You can find out more about the so-called «VAT refund» here.

The legal basis for VAT refunds can be found in Article 107 paragraph 1 letter b of the Federal Act of 12 June 2009 on Value Added Tax (VAT Act) and in Articles 151 - 156 of the Value Added Tax Ordinance of 27 November 2009 (VAT Ordinance). For detailed information on the refund of VAT, please refer to the VAT info on refund procedures.

Questions & Answers About VAT Refund

What must the proof of entrepreneurial status issued by the foreign tax authority contain?

To be entitled to a refund, the foreign company must, among other things, prove to the FTA their business character in the state of their domicile, of their place of business or of the permanent establishment (art. 151 para 1 let. d Ordinance on Value Added Tax).

The proof of entrepreneurial status issued by the foreign tax authority must be valid for the refund period (calendar year).

When a reciprocal right is given and the country has a VAT system (see list of countries (PDF, 206 kB, 22.12.2021)), the proof of entrepreneurial status must always:

  • confirm that the applicant is registered for VAT during the period for which the VAT refund is claimed; or
  • indicate the date on which the applicant was entered in the register of VAT payers.

If a reciprocal right is given and the country does not have a VAT system (see list of countries (PDF, 206 kB, 22.12.2021)), the proof of entrepreneurial status must always:

  • confirm the entrepreneurial status during the period for which the VAT refund is claimed; or
  • indicate the date on which the applicant obtained entrepreneurial status.

If the aforementioned conditions are not met, the FTA will not be able to process the application nor refund the Swiss VAT.

Who can apply for a tax refund?

Recipients of services with a residence, place of business or permanent establishment abroad who have expenses in Switzerland for entrepreneurial activities can have the VAT paid on these services refunded. Under certain conditions, this possibility also exists for the import tax paid.

What are the basic requirements for a VAT refund?

In order to claim the VAT, the following material requirements must be fulfilled cumulatively by the applicant:

  • The place of residence, of business or permanent establishment must be abroad
  • No VAT registration in Switzerland or Liechtenstein (no tax liability according to Article 10 VAT Act)
  • The applicant does not render supplies in Switzerland
  • The applicant has to furnish proof of entrepreneurial status (business status) in the state of residence or business domicile
  • The invoices submitted must meet the formal criteria according to art. 26 para. 2 VAT Act and must correspond with the refund period
  • The state of residence or place of business or of the permanent establishment of the applicant must grant a corresponding reciprocal right (for more information please see «reciprocal right»)
  • Only one application can be submitted per year
  • The VAT refund is not possible for a total amount of less than CHF 500

What are the formal requirements for a VAT refund?

  • The application for a VAT refund must be submitted with the official forms of the Federal Tax Administration (forms no. 1222 and 1223). Non-official forms will not be accepted.
  • The applicant must appoint a representative with place of residence or business in Switzerland. For applications submitted in Liechtenstein, a representative must be appointed with place of residence or business in Liechtenstein. The power of attorney must be given for each application submitted by filling in form no. 1222.
  • The applicant proves his entrepreneurial status to the Federal Tax Administration FTA by the competent authority in the county of residence, business domicile or permanent establishment.
  • The application for remuneration must be submitted with the original invoices of the service providers or the assessment orders (import tax) of the Federal Customs Administration FCA.

What is the deadline for submission?

The application for VAT refund can be submitted from 1 January to 30 June of the following calendar year. The deadline (30 June) cannot be extended (date of postmark).

When is the reciprocal right given?

In accordance with art. 152 para. 1 VAT Ordinance, a reciprocal right is given if:

a) companies with their domicile or effective place of business in Switzerland have the right to claim VAT refunds paid on supplies acquired from the foreign jurisdiction, which in scope and restrictions is commensurate with the right of input tax deduction that companies resident in the foreign state have;

b) a tax comparable with the Swiss VAT is not levied by the foreign jurisdiction; or

c) a different type of sales tax is imposed in the foreign jurisdiciton, which affects companies with their domicile or effective place of business in the foreign state in the same way as enterprises with their domicile or effective place of business in Switzerland.

The Federal Tax Administration FTA provides a list of states with which a reciprocal right declaration has been exchanged. If a state is not listed, the applicant may prove otherwise that the requirements according to art. 152 para. 1 VAT Ordinance are met. The FTA will take this evidence into consideration, if the following requirements are fulfilled:

The applicant must furnish proof of registration for VAT purposes in the jurisdiction of residence, stating that one of the conditions mentioned in art. 152 para. 1 VAT Ordinance (lit. a, b or c) is fulfilled in the respective country.

  • The confirmation has to be issued in one of the official Swiss languages (German, French and Italian) or in English. If that is not given, an authorized translation into one of the official languages (certified by a notary) must be furnished.
  • If – after having examined the facts – the FTA comes to the conclusion that the reciprocal right is granted by the foreign jurisdiction, the VAT will be refunded. The corresponding list will be updated and supplemented at the end of each year.

Principality of Liechtenstein (valid from the 2012 remuneration period)?

VAT charged by service providers / suppliers in Switzerland or Liechtenstein will be refunded by the respective state. Therefore, a separate application must be submitted to the competent authority in Switzerland and Liechtenstein. Since import taxes are levied by the Swiss Customs Authority, the VAT refund on imports will only be carried-out by the Swiss competent authority, the Federal Tax Administration (FTA).

A minimum amount of CHF 500 (refundable tax) is applicable for refunds in each state. A representative must be appointed in in Switzerland and in Liechtenstein.

Please note, that the new procedure concerning the VAT refund for Switzerland and Liechtenstein will be published in our brochure ( MWST-Info 18, only available in German, French and Italian) at a later date. As of 1 January 2013 point 6.4 of this publication is no longer applicable.

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