Switzerland Update: The New Platform Taxation in VAT Law

Platform taxation was introduced with the partial revision of the VAT Act[1], which came into force on 1 January 2025. It complements the mail-order regulation already introduced on 1 January 2019, which obliges foreign mail-order companies to register and account for VAT if they achieve an annual turnover of at least CHF 100,000 with small consignments in Switzerland[2]. Both the platform taxation and the reverse trade regulation are primarily aimed at eliminating the competitive disadvantage of domestic mail order companies, whose consignments are generally subject to VAT[3]. Since the introduction of the retail trade scheme, many foreign mail-order companies have registered in the register of persons subject to VAT. However, as the number of untaxed shipments from abroad has continued to increase, electronic platforms are now being held accountable. Similar efforts are also underway in the EU[4].

Legal basis

The introduction of platform taxation required a number of adjustments to the law. The central standard is the newly inserted Art. 20a VAT Act, which regulates the allocation of services for deliveries via electronic platforms. Anyone who enables a delivery with the help of an electronic platform by bringing seller and buyer together to conclude a contract on the platform is considered to be a service provider vis-à-vis the buyer in accordance with Art. 20a MWSTG. From the point of view of VAT, a three-party relationship is therefore fictitious. The provision in Art. 20a of the VAT Act takes precedence as lex specialis of the general provision in Art. 20 of the VAT Act. Their application requires that buyers and sellers are brought together on the platform and, in principle, that the contract is concluded via it. In addition, the platform operator must generate revenue from the business.

Scope

The regulation affects domestic and foreign operators of electronic platforms that enable deliveries to persons in Germany by bringing buyers and sellers together, both in the B2B, B2C and C2C sectors. According to the legal definition, electronic platforms are electronic interfaces that enable direct online contacts between several people with the aim of providing a supply or service[5]. The regulation therefore covers electronic interfaces, such as websites or apps that bring buyers and sellers together. However, providers who sell goods with the help of electronic interfaces and act as sellers themselves are not covered. They were already considered service providers under the old law. Platform taxation only covers supplies of goods within the meaning of Art. 3 lit. d no. 1 of the VAT Act and not also services sold via electronic platforms[6]. However, it is to be expected that platform taxation will one day be extended to services. A political initiative aimed at this is already pending[7]. As mentioned, a supply is only attributed to the electronic platform if it is involved in the delivery with a certain intensity. Finally, the general rules apply to the VAT liability of the platform operator. This means that a foreign platform operator, without a permanent establishment in Switzerland, which exclusively makes deliveries with a place of delivery abroad, is only liable to tax if it submits a declaration of subordination abroad or falls under the mail order regulation.

Functionality

The best way to illustrate how platform taxation works is with an example: A., who is resident in Switzerland, orders a bottle of wine from Domaine du Vin Sàrl in France at a price of 128 francs via the platform of Best Wines Ltd., based in the United Kingdom.

Under civil law, a purchase contract is concluded between A. and Domaine du Vin Sàrl. Since the buyer and seller were brought together via the electronic platform and the contract was concluded via it, the supply to A. is attributed to Best Wines Ltd. For the purposes of VAT, a tripartite relationship is therefore fictitious: Domaine du Vin Sàrl makes a supply to Best Wines Ltd. and Best Wines Ltd. makes a supply to A. The first supply is a foreign supply and is therefore not subject to VAT. According to the new No. 13 of Art. 23 para. 2 of the VAT Act if it is attributed to the platform operator and the latter is entered in the register of persons subject to VAT. The second delivery, on the other hand, is generally taxable, provided that the place of delivery is domestic, which, however, is usually not the case with imports, unless the platform operator has made a declaration of subordination abroad or falls under the mail order regulation. If necessary, the platform operator must settle the domestic tax on the second delivery. The delivery is also subject to import tax. In order to avoid the buyer having to pay import tax in addition to the domestic tax that the platform operator has to charge him, the platform operator should be indicated as the importer in the customs declaration.

The registration of the platform operator as an importer also makes it an importer under customs law and other laws, which is not without problems. For example, the importer is a customs debtor under the Customs Act, although the platform operator has little to do with the actual import. The question also arises as to whether the platform operator can be held responsible as a formal importer under the Product Liability Act or whether it is liable for the import of illegal goods (e.g. weapons). As part of our advice, we show how these risks can be reduced.

[1]      AS 2024 438.

[2] Art. 7 para. 2 lit. b VAT Act.

[3] Import tax is not levied on small consignments if it does not exceed 5 francs.

[4] The ViDA reform package (VAT in the Digital Age) adopted by the EU Council also provides, among other things, that electronic platforms can be obliged to collect VAT in certain cases.

[5] Art. 3 lit. l VAT Act.

[6] Platform taxation is also not applicable to deliveries or rental transactions under a contract for work and services.

[7] Motion 23.3012 “VAT liability for online platforms in electronic services” of the Committee for Economic Affairs and Taxation of 13 February 2023.