The VAT Revision - Part 3: Changes for the Community and Electronic Newspapers/Books

Starting in 2018, significant VAT changes will take effect in Switzerland, primarily affecting municipalities and electronic publications.

2017

The VAT Revision - Part 3: Changes for the Community and Electronic Newspapers/Books

The Value Added Tax (VAT) in Switzerland is undergoing a complete revision. The first part of the revision has been in effect since 2010. Now, the second part will follow as of January 1, 2018. This leads to significant changes in some areas. According to the Federal Council, 30,000 new VAT liabilities are expected. Findea explains in a four-part series of articles how the VAT revision came about and what the main changes are. The first article illustrated why the VAT revision is so important. The second article, explained the changes that the VAT revision brings for foreign companies. In this third article, the changes for the public sector and for electronic newspapers and books are outlined.

Changes for the Public Sector

‍The purpose of the VAT revision is primarily to simplify the VAT regulations for the public sector (autonomous departments of the Confederation, cantons, and municipalities). Until January 1, 2018, the tax liability of the public sector is measured by two criteria:

The public sector must generate at least CHF 25,000 from services to the non-public sector.
The total turnover of the public sector must amount to at least CHF 100,000

A new single revenue threshold will now be introduced. It has been set at a turnover of CHF 100‘000 from services to the non-public sector. Whether this represents a preference for the public sector over private competition is debatable.

‍Changes in the Tax Rate for Electronic Newspapers and Books

‍Firstly, it should be noted that these changes only concern electronic newspapers, magazines, and books that are not of an advertising nature. Until now, these products were subject to the regular tax rate of 8%. From January 1, 2018, they will be taxed at the reduced rate of 2.5%. The determination of whether a specific purchase is to be recorded under the old or the new tax rate is based on the time of service provision. This is the moment when access to the published content is possible.

Findea helps you keep your taxes simple and straightforward.

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