Switzerland: Determination of the place of supply for vat purposes

Deliveries with installation to Switzerland: who takes on the role of importer of record? Making a clear distinction between a “contract for work, labour and materials” and a “delivery with minimal assembly and installation” is key here.

In Switzerland, only a true importer with Swiss VAT registration may claim back import tax. An exception to this rule would be a foreign supplier who has already signed a form referred to as a subordination licence or operates under the terms of Incoterm2010® DDP – and where the delivery is made to a Swiss-based client. In this scenario, the foreign supplier would already be considered to be the importer of record, regardless of the volume of assembly and installation which the machines, furniture and other items he or she is importing into Switzerland may require at their destination, explain the Ecovis experts.

In all other cases, though, the place of supply for a delivery requiring minimal assembly and installation is the location where the transport starts. Therefore, if a machine is entirely built abroad and does not require anything more than to be plugged in and given a test run in Switzerland, the place of supply is deemed to be abroad. Besides this, if a machine is entirely built abroad and only partially disassembled abroad for transport, the re-assembly in Switzerland is considered to be a case of minimal assembly and installation. The place of supply therefore again remains at the place where the transport started, which is abroad. If the place of supply is always outside of Switzerland, the supplier can reclaim any VAT paid on exhibition and travel costs. In the case of a simple delivery or a delivery requiring only minimal assembly and installation the recipient in Switzerland is considered to be the importer of record and is therefore entitled to an import VAT refund within his VAT refund allowance. If the seller’s place of supply is always outside of Switzerland, the seller can reclaim the Swiss VAT on exhibition and travel costs.

The place of supply for a delivery requiring more than the above-mentioned minimal assembly and installation is Switzerland. If a foreign supplier achieves a worldwide, generally taxable turnover of more than CHF100,000, the supplier must register for VAT in Switzerland and charge the VAT due on the sale of goods to the Swiss customer at a rate of 7.7%. The import VAT as well as any previously paid VAT taxes on hotel as well as travel and exhibition expenses can be reclaimed.

If a foreign supplier does not reach the threshold of a worldwide turnover of CHF100,000, he can choose not to register for Swiss VAT, but the import tax will then be calculated on the sales value of the goods plus the cost of assembly and installation. Also, while the import VAT can be reclaimed by the customer, any VAT paid on travel and exhibition expenses incurred by the supplier will not refunded.

Example of deliveries to Switzerland considered requiring assembly or installation:

• installation of a machine into a production line
• first-time assembly of a new fully functional machine from separate pre-fabricated parts
• hooking-up several machines to form an assembly line
• addition of new parts to a machine which was disassembled for transport
• installation of a kitchen or other furniture made to order
• housing construction
• repair and maintenance of machine and real estate
• renting of pavilions and booths for special events and fairs, etc.