• Jacqueline Emter, Expert |
  • Meret Wälchli, Expert |

In the popular referendum on 15 May 2022, the Swiss electorate voted in favor by 58.4% of the votes cast on the amendments to the new Film Act. This means that going forward, there will be an obligation to invest in Swiss filmmaking. To determine the gross income, the VAT returns are used.

Obligation to invest

Switzerland has enacted its revised Film Act: as per this law, any streaming or television service in Switzerland that generates annual gross income of more than CHF 2.5 million per year becomes liable to invest in Swiss filmmaking. This obligation aims at promoting local filmmaking and creating a level playing field for domestic and foreign broadcasters and streaming providers. 

In practical terms, this means it will now be compulsory for foreign TV stations that broadcast Swiss advertising windows and streaming providers to also invest a 4 percent levy on their gross income generated in Switzerland, as is the case for their local peers. Alternatively, it is possible to pay a substitute levy to the Federal Office of Culture (FOC). 

This newly introduced investment obligation amounts to 4% of the annual gross income generated in Switzerland. 

The obligation to invest will apply from 1 January 2024. 

The Film Act from a VAT perspective

The Ordinance on the European quota and the obligation to invest in Swiss filmmaking specifies how the relevant gross income are to be determined. Much like France that also applies an investment obligation in the audiovisual sector, it is foreseen that the investment obligation will be calculated based on the companies' gross income reported to the Swiss Federal Tax Administration. Upon generating more than 2.5 million in revenue in this specific sector, a company is required to invest 4% of this income. 

Pursuant to the Film Act, the Federal Office of Culture (FOC) is to maintain a public register in which television and on-demand services must register unprompted (FiA Article 24g). Foreign companies without a registered office in Switzerland are required to provide a domestic postal address.  

To enable the Federal Office of Culture (FOC) to verify the relevant income, companies must provide the FOC with copies of their VAT returns together with the corresponding annual financial statements. The income declared in the VAT form in item 200 less items 221 and 235 is decisive for the gross income. 

The current consultation period for the Ordinance runs until 17 February 2023. 

Exactly what does this mean for VAT returns?

Registered television and on-demand services are required to submit documentation of their gross income, annual accounts and VAT returns by 30 April of the following year. Considering that the VAT returns serve as a basis for calculating the investment obligation, it becomes even more important to prepare the VAT returns correctly and on time, as well as to reconcile it to the annual declaration. Even if the VAT Act requires the income reconciliation to be filed only by the end of June of the following fiscal period, we advise the companies concerned to file it before submitting it to the FCO.

Since the obligation to invest will apply from 1 January 2024, the statements for 2024 will presumably need to be submitted for the first time at the end of April 2025. 

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