VAT- Partial Revision Postponed For One Year, But There Are Still Changes


Many changes to the VAT Law have been planned and discussed for a long time. These changes should actually have become effective on 1 January 2016. Unfortunately, for various reasons this ambitious plan could not be maintained; the partial revision has been postponed until 1 January 2017. Nonetheless, important changes come into force immediately, which from the Swiss VAT perspective ned to be taken into account:


    The Federal Tax Administration (FTA) has up to now assumed basically that anyone who renders services against compensation over a longer period operates a business and therefore would be liable for VAT. A supply as defined by Art. 3 lit. c VAT Law is the concession of a usable economic asset to a third party in expectation of a consideration". As the supply should also be over a longer period, it is to be rendered inter alia systematically and repeatedly. An occasional, in particular only one-time performance of this activity would therefore not be sufficient to constitute subjective tax liability (cf. BGE 138 II 251). It is this Federal Court judgement which cites as examples the following indications for the existence of the longer-term rendering of a service: performance over several years, systematic approach, an activity geared to repetition, the generation of several turnovers, undertaking several similar actions using the same facility, the intensity of the activity, involvement in the market, maintaining a business and the manner of appearing before authorities.

    25/75 PER CENT RULE

    If it is foreseeable that in the longer term less than 25% of the revenues will consist of revenues from supplies and services and more than 75% of donations, subventions, etc., the FTA denied a business activity. This principle was defined by the FTA in Heading 7.2 of its MWST- Info 02 "Steuerpflicht". Accordingly the FTA took the view that the longer term achievement of revenues cannot be presumed (and therefore a business activity), if it is a priori clear that with the activity in question no, or to an obviously subordinate extent, considerations for supplies and services can be earned.


    It was not in dispute that in the case in question a business activity was given. Revenues were earned over the longer term. However, the FTA believed that, based on the 25/75 per cent rule it had developed, the turnovers were in the end too low to trigger the subjective tax liability...

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