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Philipp S. from Pfäffikon thought he had made a bargain when he commissioned the painting business Pinsel from Bregenz to paint the exterior façade of his rental building in St. Margrethen SG. Despite the lower costs compared to Swiss providers, he was very satisfied with the quality of the work performed. However, he suddenly received a letter from the Federal Tax Administration (ESTV) stating that he had to pay value added tax on the painting work. Flustered, he turns to his fiduciary and good friend at Companion Consulting AG, Freienbach. However, his tax advisor confirms that this is correct due to the lack of Swiss VAT registration of the painting company. Gritting his teeth, Philipp S. pays the acquisition tax (reverse-charge) and books it as a lesson.
But what is the acquisition tax?
In simple terms, it is VAT on the acquisition of services from companies based abroad by recipients in Switzerland. Or more precisely, as art. 45 paragraph 1 MWSTG states it:
The following are subject to the acquisition tax:
a. supplies of services by businesses based abroad that are not entered in the Register of Taxable Persons where the place of supply under Article 8 paragraph 1 is situated on Swiss territory, with the exception of telecommunication or electronic services supplied to non-taxable recipients;
b. the import of data storage media without market value with the services and rights included therein (Art. 52 para. 2);
c. supplies of immovable goods on Swiss territory that are not subject to import tax and which are made by businesses based abroad and which are not entered in the Register of Taxable Persons, with the exception of making such goods available for use or exploitation;
d. the supply of electricity in cables, gas via the natural gas distribution network and district heating by businesses based abroad to persons liable to tax on Swiss territory.
Who has to pay the acquisition tax?
Art. 45 paragraph 2 MWSTG states that all those who are liable under Art. 10 MWSTG and all those who receive such services for more than CHF 10,000 in a calendar year are liable. Please note! This does not mean per service but cumulatively for the entire calendar year. If you exceed the value of CHF 10,000, tax is due on the entire amount.
How does a private individual or a company not subject to VAT have to declare the acquisition tax?
Art. 66 para. 3 MWSTG states that anyone who becomes liable to pay tax solely on the basis of the supply tax must register in writing with the ESTV within 60 days of the end of the calendar year for which they are liable to pay acquisition tax and declare the services received. A simple letter to the ESTV is sufficient.
Why has my craftsman from abroad shown Swiss VAT on the invoice?
This may be the case if he is liable for VAT in Switzerland under Art. 10 of the VAT Act or if he has registered voluntarily. Incidentally, you can look up whether someone is actually registered in the UID register www.uid.admin.ch.
