The VAT reforms are expected to bring in an additional CHF70 million every year Keystone

The Swiss parliament has officially approved reforms to the country’s value-added tax (VAT) regime that would oblige overseas firms to impose VAT on all purchases and services. The goal is to protect Swiss firms from lower-priced competitors abroad.

This content was published on September 29, 2016 - 15:50

swissinfo.ch and agencies

Currently, online purchases from abroad that attract less than CHF5 ($5.15) in VAT are exempt. This translates into an upper limit of CHF200 worth of books or CHF62.50 of goods that don’t benefit from a favourable tax status.

According to the VAT reform passed on Thursday, all firms with turnover of over CHF100,000 will be obliged to impose Swiss VAT for Swiss customers. The Swiss VAT rate is 8% for most goods and 2.5% for certain items like books. The move will affect the attractiveness of buying from foreign multinationals like Amazon, whose prices are very competitive compared with high-priced Switzerland.

A date for the law to come into force still has to be announced.

All is not gloom for online shoppers though. Electronic publications will be subjected to a lower VAT of 2.5% – instead of 8% – as is the case for hard copy equivalents.

Bricks-and-mortar foreign firms, especially those near the Swiss border and in the building trade, have also been targeted by the reforms. Swiss clients using their services will have to pay VAT of 8% up to a limit of CHF800. This is applicable to firms with a global turnover over CHF100,000 with the aim of protecting Swiss small and medium-sized enterprises from lower-priced competitors across the border.

About 30,000 companies, notably Swiss-based firms mainly doing business abroad, will subject to VAT according to the government. The VAT is expected to lead to an additional CH70 million in annual revenue. The government plans to hire an additional 38 staff for the administration.

This article was automatically imported from our old content management system. If you see any display errors, please let us know: community-feedback@swissinfo.ch