New VAT rules for online retailers in Switzerland - with tax and fiduciary expert Dominik Baldegger

VAT is a key challenge for companies and retailers operating in e-commerce. Incorrect calculation or invoicing of VAT can lead to financial disadvantages or, in the worst case, even legal consequences. In view of the increasing complexity of Swiss VAT law and extensive changes in the new year, it is essential for online retailers to inform themselves about the applicable provisions and ensure that their business processes comply with the legal requirements.

The Partial revision of value added tax came into force on January 1, 2025 and also affects platform taxation in Switzerland, among other things. We have therefore asked our Swiss tax and fiduciary experts at cmt ag Dominik Baldegger asked what online retailers who use platforms such as Galaxus or your own web store to the Swiss market and what will change for you.

The status quo to date

The previous practice was for invoices to Swiss end customers to show a VAT rate of 8.1 percent. Prior to import, a pro forma invoice was issued without VAT and a charge only had to be made to the respective marketplace. In order to ensure a full refund of the VAT paid on import, all sales had to be properly declared. VAT was due regardless of the chosen sales channel (marketplace or own webshop).

A look at the current changes

As of January 1, 2025, a number of changes will come into force in Switzerland as a result of the partial revision of VAT legislation. Swiss tax and fiduciary expert Dominik Baldegger emphasizes this:

"The introduction of platform taxation is key, as online retailers will have to distinguish between two sales channels in future: sales via online platforms, such as Galaxus, Zalando or Amazon, and sales via their own online store. This distinction has far-reaching consequences for invoicing, the processing of imports, accounting and ultimately also for the billing and declaration of VAT."

Companies and retailers are therefore required to adapt their business processes to the new regulations in order to ensure correct tax processing. In the following, we look at some specific case studies for online retailers with Dominik and work out what they now need to pay particular attention to in the context of the new VAT regulations.

Case study A: Selling via an online platform

The common example from practice concerns online retailers who sell their products via an online platform and thus use it as a sales channel. For our case study, we assume that our online retailer sells products via the sales channel Galaxus sold:

Since January 1, 2025, the platform - in our case Galaxus - has assumed responsibility for VAT payment. This means a significant relief for online retailers and suppliers, as from now on the online platforms themselves will be responsible for dealing with the complex VAT regulations in Switzerland.

In concrete terms, this means

• Invoicing: Galaxus issues an invoice to end customers with the applicable Swiss VAT rate of 8.1 percent.
• Payment processing: End customers pay directly to Galaxus.
• Import via the EU hub*: When online retailers import goods via the Galaxus EU Hub, Galaxus takes care of all customs formalities and VAT processing. When using the EU hub, online retailers are considered suppliers and are completely decoupled from these processes.
• Import without EU hub*: If online retailers import the goods into Switzerland themselves and hand them over to Galaxus, they must initially pay the import sales tax themselves. However, online retailers will then receive a credit note from Galaxus that corresponds to the net sales price minus the agreed commission. However, the seller is then responsible for reimbursing the import VAT paid.
• Other platforms: If the products are also sold via other platforms such as Amazon or Zalando, online retailers must check the respective terms and conditions of these platforms separately, as they may have different regulations.

"The so-called 'EU hub' was introduced and officially licensed by Galaxus as a cross-border solution for goods from European countries. This also enables German online retailers to enter the Swiss market easily. The shipping and transportation itself is handled entirely by Galaxus."

- Swiss tax and fiduciary expert D. Baldegger

Accounting & declaration for sales via platforms

So far, so good, but what about the accounting and declaration obligations of online retailers? "When selling via Galaxus, retailers post the net turnover without Swiss or German VAT. The ideal solution here would be to set up a separate 'Swiss platform sales account' with a tax key of zero percent in order to clearly separate the transactions," recommends Baldegger. "Nevertheless, coordination with German tax advisors is also necessary in order to comply with commercial law regulations, as the tax treatment is based on national regulations," he continues.

The good news for online retailers who use the EU hub: There are no further accounting measures regarding VAT here. "For all retailers who trade with the EU hub, a complete overview of all orders must be created and this must be compared with the zero percent invoices created in the accounting department. This documentation ultimately serves as proof for the VAT audit and proves the tax-free domestic sale to the platform," adds Baldegger.

The declaration obligation for online retailers who use the EU hub in Switzerland is retailer-friendly, as no separate VAT declaration is required. Without the EU hub, there is usually an input tax surplus on all imports. Customers who have previously used the relocation procedure can then no longer use it.

Baldegger summarizes the changes for sales via platforms as follows:

"The introduction of platform taxation makes it much easier for retailers to do business with Switzerland, especially if they use the Galaxus EU hub. As an online retailer, you no longer have to deal with complex VAT formalities. However, if you sell via your own online store and import directly into Switzerland, you should find out exactly how import VAT is refunded. Different regulations may apply to platforms other than Galaxus, which you as a retailer must discuss yourself."

Case study B: Selling via your own webshop

But what is the situation for online retailers with their own online store? Do the same regulations apply here as for sales via platforms? "The previous regulations continue to apply to sales via your own online store. As online retailers already handle this sales channel independently, no additional adjustments are necessary," replies Baldegger.

The following procedure for online retailers therefore remains in place:

• Invoicing: Swiss customers will continue to receive invoices with the applicable Swiss VAT rate of 8.1 percent.
• Revenue posting: Sales from the web store are recorded separately from sales via other sales platforms and are subject to the corresponding tax key of 8.1 percent.
• Input tax deduction: For imports that are not processed via the EU hub, retailers can claim input tax in full.

Conclusion

Sales via your own online store remain largely unaffected by the new regulations on platform taxation. Online retailers can retain their existing processes, but must ensure that sales from both sales channels (platform and own webshop) - if applicable - are correctly separated and documented.

How online retailers can adapt now

In order to ensure smooth implementation of the new VAT regulations, online retailers who sell their products via platforms are under particular obligation. However, there are no significant new obligations for sales via your own online store.

Here is an overview of what online retailers who sell their products via platforms need to do now in order to best implement the new VAT regulation.

1. Communication with the platform: A direct discussion with the respective sales platform (Galaxus, Amazon, eBay, etc.) is essential. The exact processes for both sales channels, i.e. via the platform and via your own webshop (if available), should be clarified.
2. Implementation planningTo ensure effective implementation, detailed planning is most effective. All necessary adjustments to business processes and accounting must be taken into account.

Summary

Close cooperation with the platforms, the accounting experts and, if necessary, the tax authorities can ensure successful implementation of the new VAT regulations. Detailed planning and a clear definition of processes are crucial for a smooth transition.