News Value Added Tax

Platform Taxation – Pitfalls for Platform Users

With the partial revision of the Value Added Tax Act (VAT Act) coming into effect on 1 January 2025, a deemed delivery will be assumed solely for VAT purposes when goods are supplied via an electronic platform operated by third parties. For VAT purposes only (not under civil law), the sale will be treated as a two-step process: a delivery from the seller to the platform and from the platform to the buyer. While these changes appear to place the primary obligation on platforms, they also have significant implications for sellers, including those not registered for VAT. Below is a brief overview of some key points.

Subsidiary Liability: The seller is subsidiary liable for taxes that the platform must remit due to this deemed delivery. Sellers should assess the extent to which this liability could apply and consider how to mitigate risks. It is advisable for sellers to regularly check whether partner platforms are registered for Swiss VAT and that no measures have been taken against them.

Destruction of Goods: As a measure against platforms that fail to meet their obligations—namely, registration and compliance with reporting and payment duties—the Swiss Federal Tax Administration (ESTV) can impose import bans and order the destruction of goods. Sellers must also consider safeguards if a buyer cannot receive goods due to actions taken against a platform. Regular checks on platforms’ VAT registration and screening for potential sanctions are therefore recommended.

Tax-Exempt Delivery: The deemed delivery from the seller to the platform is tax-exempt with credit. In this context, sellers should review the need for any adjustments to their bookkeeping.

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Matthias Höhn, 15.11.2024

Keywords: VAT, value-added tax, platform taxation