Companies that purchase services abroad have already encountered the purchase tax. However, private individuals can also be affected and are often unaware of it. As always, looking at the terms and conditions will help you complete the purchase, professional advice and support and a careful declaration.
What is the purchase tax?
The purchase tax is levied on importing certain services from abroad and must be taxed by the recipients domestically. While customs plays a central role when importing physical goods and collects the import tax for the federal government, the purchase tax comes into play when importing services. It takes on the function of import tax and aims to put domestic and foreign service providers on an equal footing from a tax perspective and to contribute to fair competition. For example, marketing services (Google Ads, etc.), personnel leasing or engineering contracts are subject to purchase tax.
Legal regulation and those affected
Those who are primarily affected are service recipients in Switzerland who are subject to VAT, i.e. companies. Not only that, private individuals can also be required to declare: Anyone who obtains services abroad that are subject to purchase tax and spends over 10,000 Swiss francs per calendar year must report this. For example, influencers who commission foreign companies or use digital services from foreign companies can cross this limit more quickly than expected. At this point, we would like to point out that you should always read the general terms and conditions with a focus on the tax conditions of the foreign service provider. The note “VAT reverse charge” on a foreign invoice can also indicate a possible case of purchase tax.
Correct handling
Once the affected services have been identified, a carefully completed declaration avoids negative tax consequences. As recipients of services, domestic companies are obliged to report the import taxes owed to the Federal Tax Administration as part of the regular quarterly statement. According to the current status, the deadline for private individuals to declare the previous year’s purchase tax expires in the end of January, whereby the bundled declaration must be submitted with a written notification. You can find the applicable information on this Federal Tax Administration website.
