Switzerland: Draft guidelines on platform rules for goods effective 2025

The Swiss tax authorities on July 9, 2024, released draft guidelines regarding the forthcoming platform rules for goods, which will take effect on January 1, 2025. The draft guidelines are currently open for consultation until August 23, 2024.

The broad scope of these rules includes information requirements for all platforms. This report summarizes key details of the upcoming rules provided in the guidelines.

New rules for platforms

Under the new Article 20a of the Swiss VAT Act, a person (whether Swiss or foreign) who facilitates the sale of a good through an electronic interface will be treated, for value added tax (VAT) purposes, as the seller of the good. This means they are considered to have purchased the goods from the original seller and resold them to the customer. However, sellers have a subsidiary liability in case a platform is not complying with the rules.

The term "facilitate" involves the use of an electronic interface to connect a buyer and a seller to conclude a sale using this interface. For a platform to be deemed as facilitating a transaction, certain indicators must be present, such as ownership of customer data, managing the communication of the order, and the ability to process payments or refunds. Additionally, if the transaction includes physical aspects such as the delivery of goods, the platform should not appear outwardly as a simple tool provider but needs to be involved actively in the transaction to be considered under this article.

Platforms that are not involved, either directly or indirectly, in the proceed of ordering goods or who do not generate gross receipts related to the transactions are not subject to the new provision. In this respect, the draft guidance states that a platform performing the following activities is not subject to the new rules: (1) the processing of payment in relation to the sale of goods; (2) the placement of advertisements for goods; (3) the advertising of the goods through advertising services; and/or (4) the redirecting or transferring of customers to other electronic interfaces where the goods are offered for sale.

B2C vs. B2B status of the seller and buyer

The Swiss VAT law does not distinguish between sales of goods made to taxable and non-taxable persons. Hence, platforms do not need to identify whether the transactions they facilitate are for customers who are taxable persons.

In addition, it is assumed that the seller is conducting a business activity, primarily because the gross receipts threshold required to be exempt from tax liability on Swiss territory is relatively high. Therefore, it is impractical for platforms to assess whether an individual seller is conducting a business activity based on factors like income sources, appearance, profitability, or permanence.

As a consequence, the platform rules include business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C), and consumer-to-business (C2B) sales. If the underlying seller is a business already liable for VAT, additional options are available to the platforms and sellers.

Transactions subject to the new rules

All sales of goods (domestic and imported) are covered. As the new rules create a deemed buy-sell, the VAT treatment will depend on whether the transaction is a domestic or international sale:

• Domestic: The seller is performing a zero-rated deemed sale to the platform who itself performs a taxable deemed sale to the customer.
• International: While the seller is also performing a deemed zero-rated sale to the platform, the platform is, in principle, deemed to be the importer of record of the goods and subsequently performs a domestic taxable sale to the customer. Note that Switzerland has not repealed the small consignment exemption. In this respect, the platform liability is only triggered if the total value of small consignments exceeds CHF 100,000 per year or the platform benefits from a declaration of subordination (subjects itself under the Swiss rules). Moreover, as the platform is the importer or record, it will be able to reclaim the import VAT through its VAT return or apply the import VAT deferment procedure. Finally, the guidance clarifies that in certain circumstances the seller may also be the importer of record, in which case the sales transaction through a platform should be considered a domestic sale.

Services facilitated by platforms are treated differently. Platforms facilitating sales of services are not affected by the platform rules. However, these platforms still have obligations to provide information about the transactions they facilitate.

Registration obligation

A platform is required to register for VAT if (1) it generates annual gross receipts from non-exempt transactions amounting to CHF 100,000, and (2) it has its registered office on Swiss territory (including Switzerland and Liechtenstein) or facilitates transactions on Swiss territory. In this respect, a transaction is considered made in the Swiss territory if (1) the goods are sold from the Swiss territory, or (2) the platform facilitates sales of small consignments imported into Swiss territory valued above CHF 100,000 per year.

As a simplification, the guidance clarifies that platforms facilitating the sale of domestic sales and of imported goods may apply VAT on all sales, thus disregarding the CHF 100,000 annual threshold for small consignments.

Invoicing obligation

For VAT purposes, platforms need to issue invoices including specific details such as the date of the sale contract, nature and scope of the transaction, identities of the seller and customer, delivery address in Switzerland, price paid in Swiss francs, and the VAT amount charged, broken down by rate.

In addition, to avoid confusions with civil obligations of the parties, platforms must add a statement on the invoice indicating VAT was charged by the platform under Article 20a of the VAT Act, along with the platform's name and VAT number.

Information reporting requirement

All platforms facilitating direct online interactions for goods or services (including those not subject to the new platform rules) must keep a register of transactions or at least be able to report the annual gross receipts generated on Swiss territory by sellers active on the platform. For sellers generating annual gross receipts of more than CHF 50,000 per year on the platform, the records must include the seller's contact details (name, postal address, email address or website), the gross receipts generated on the platform, the location of the accommodation (if applicable), and if available, the type of sales offered and a list of recipients on Swiss territory. Specific information is only required if the annual gross receipts of sellers on the platform exceeds CHF 50,000.

Platforms must voluntarily submit these records electronically to the tax administration by January 31 of the following year if the total transaction value exceeds CHF 1 million during the calendar year. Otherwise, platforms are only required to submit records electronically upon request from the tax administration. These records must be maintained for 10 years from the end of the transaction year.

Non-compliance with these record-keeping obligations does not make the platform jointly liable for VAT due from the sellers but could lead to criminal prosecution.
 

For more information, contact a KPMG tax professional:

Anna Junghardt | annajunghardt@kpmg.com

Philippe Stephanny | philippestephanny@kpmg.com