202412.03
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Revision of the Value Added Tax Act (MWSTG) from 1 January 2025

in Taxes, Corporates and Foundations

Revision of the Value Added Tax Act (MWSTG) 2025

On January 1, 2025, a comprehensive revision of the Value Added Tax Act (MWSTG) and the Value Added Tax Ordinance (MWSTV) will come into force. The aim of this reform is to improve tax fairness, introduce administrative simplifications, and strengthen the fight against tax fraud. Here are the key changes and their impacts:

1. Annual VAT Accounting

Companies with a turnover of up to CHF 5 million can opt for annual VAT accounting starting in 2025.

  • Advantages: Reduced administrative burden compared to quarterly accounting.
  • Requirements: Application must be submitted by February 28, 2025. Installment payments (minimum CHF 500 per installment) remain mandatory.
  • Limitations: The ESTV may revoke annual accounting if declarations are not submitted on time or if the turnover threshold is exceeded.

2. Changes to the Flat Rate Tax Method (SSS Method)

The SSS Method will become less attractive and more complex due to the following changes:

  • Any activity generating more than 10% of total turnover must be accounted for using the corresponding flat rate.
  • Switching between the SSS Method and the effective method will require adjustments to input tax deductions based on asset value.
  • Foreign companies will no longer be allowed to use the SSS Method.

3. Tax Obligations for Online Platforms

Online retail platforms will be considered taxable suppliers for goods sold through their platforms.

  • Responsibilities: Registration with the ESTV, declaration of deliveries, and provision of specific information upon request.
  • Sanctions: Non-registration could result in an import ban or destruction of shipments.
  • Place of Supply Principle: Services provided through platforms will be taxed at the recipient’s location.

4. Subsidies and Public Entities

The revision introduces more complex tax treatment of subsidies:

  • Funds explicitly designated as subsidies by public entities will lead to input tax reductions.
  • Businesses should carefully analyze the tax implications of subsidies.

5. Additional Changes

  • Travel Agencies: New tax regulations apply.
  • Reverse Charge Tax: Transfers of emission rights and similar certificates will be subject to reverse charge tax.
  • Serial Bankruptcies: The ESTV may demand securities from managing directors involved in multiple bankruptcies.

Conclusion

  • Consider Annual Accounting: This new option offers significant simplifications.
  • Review Accounting Methods: A switch to the effective method might be more beneficial given the changes to the SSS Method.
  • Seek Professional Advice: Especially regarding subsidies and new obligations for online platforms, professional support is recommended.
  • Early Preparation: Ensure compliance with the revision requirements in a timely manner to avoid risks and penalties.

These changes represent an important step towards a fairer and more efficient tax system but require careful preparation and adjustments to internal processes.