2.3 Transfer of business

The VAT Law provides for a mandatory application of a specific procedure in case of a transfer of the totality or part of the assets. If the VAT calculated on the sales price at the statutory rate exceeds CHF 10’000.- or the sale is made to an affiliated person, the taxable person has to fulfil the reporting and tax payment obligation by a notification procedure which applies in the following cases on:

• reorganisations under Art. 19 and 61 of the Federal Law of 14 December 1990 governing the Direct Federal Tax; or
• other transfers of a totality of assets or part, thereof, to another taxable person in the context of an incorporation, a liquidation, a reorganisation or of another legal transaction foreseen in the Merger Law dated 3 October 2003.

The notifications are to be made in the course of ordinary reporting.

The notification procedure also applies if the transferee only becomes a taxable person as a result of the transfer of the totality or part of the assets. If the notification procedure is applied, the transferee takes over from the transferor the pro rata for input VAT deduction and the assessment basis for the assets transferred. The invoice shall not show any VAT but a corresponding reference that the notification procedure has been applied. Although being mandatory, if the notification procedure was not applied and the parties have (erroneously) applied VAT on the transaction, although the legal preconditions were fulfilled, the FTA will not force the parties to retroactively apply the notification procedure as long as the VAT has been paid to the FTA.