Switzerland: Proposal to expand VAT platform taxation rules to digital services

The Swiss Federal Council on December 5, 2025, opened a public consultation on amendments to the value added tax (VAT) law to adjust the taxation of bundled offerings from 70% / 30% to 55% / 45%, extend platform taxation to digital services, and provide the tax authorities with new enforcement powers.

Adjustment of bundled offerings

Under the proposed VAT change, a seller can treat a bundled offering as a single transaction taxed under the VAT category of its dominant component when that component accounts for at least 55% of the bundle’s total price (down from the current 70%). In practice, hotels and tourism operators can more often group lodging with ski passes and meals and charge the lodging’s reduced “special rate” (currently lower than the standard VAT rate) on the entire bundle, provided the lodging portion represents at least 55% of the bundle and every component is taxable in Switzerland.

Extend platform taxation to digital services

The proposal further extends platform taxation to electronic services, which means the law treats the platform (for example, an app store or streaming marketplace) as the seller for VAT purposes, so the platform registers in Switzerland and charges and remits VAT instead of thousands of individual vendors. The proposal would create a deemed buy-sell fiction whereby the underlying vendor would be deemed to be selling the digital service to the platform and the platform would then be deemed to be reselling the digital service to the customer.

Switzerland already applies platform taxation to goods since January 1, 2025. Authorities now want the same model for downloads and streaming of software, apps, films, and music, while excluding gig and sharing services like rides and accommodation bookings.

Authorities aim to improve compliance because they cannot easily identify and monitor numerous foreign e-service vendors, whereas collecting VAT from a few large platforms is simpler. Platforms would take on new administrative obligations, and some vendors would no longer need to register in Switzerland, which would reduce their compliance costs.

Enforcement powers

The Federal Tax Administration (ESTV) would be allowed to order Swiss telecom providers to block access to websites of platforms or vendors that ignore their VAT obligations, using “network blocking” modeled on Switzerland’s online gambling framework. ESTV would publish each blocking order in the Federal Gazette and notify consumers that the block comes from a government directive, not a technical problem. Authorities would use blocking as a lighter first step in an enforcement sequence and escalate to import bans and destruction of shipped goods if vendors continue to disregard VAT requirements.

KPMG observation

The public consultation is open until March 19, 2026, and interested businesses are invited to provide feedback.

If adopted, these changes would clarify the current treatment of sales of digital services through platforms as platforms are currently only liable to collect VAT instead of the underlying vendor if the platform presents itself to the outside world as vendor. This has in practice led to difficult attribution questions, which the proposal would avoid. Moreover, the proposal would align the Swiss VAT rules with the general global practice of having platforms facilitating the sale of digital services also being the VAT collector as well as the growing practice of tax authorities being able to block network access to non-compliant digital economy providers.

In practice, these changes would have the following impact:

• For platforms: Clarify their Swiss VAT obligations, while at the same time increasing their VAT compliance obligations
• For digital services providers exclusively selling through platforms: Possibility to deregister for Swiss VAT if the platforms comply with this new obligation
• For digital services providers selling both directly and through platforms: Requirement to implement controls to identify the route of each sale and apply the correct VAT treatment

For further information, contact a KPMG tax professional:

Philippe Stephanny | philippestephanny@kpmg.com

Chinedu Nwachukwu | chinedunwachukwu@kpmg.com

Anna Junghardt | annajunghardt@kpmg.com