7.1 Reverse charge mechanism - supply of services
The provision of a service does qualify as a supply of services according to Art. 8 para. 1 (basic rule) as far as the VAT Law does not stipulate a specific rule as regards the place of supply. The services in question are deemed to be performed where the recipient has established his business or has a fixed establishment for which the services are supplied, or, in the absence of such a place of business or fixed establishment, the place where he has his permanent address or usually resides. The basic rule does not make a difference between B2B services and B2C services. Therefore, the provision of such services to a Swiss taxable person or a Swiss resident will be subject to Swiss VAT.
In case the non-resident supplier is registered for VAT purposes in Switzerland, the invoice has to be issued with Swiss VAT. This applies even if the non- resident supplier is not established in Switzerland or the non- resident supplier’s fixed establishment in Switzerland does not intervene in a supply. In this aspect the Swiss law does deviate from the EU VAT Directive.
In case the non-resident supplier is not registered for VAT purposes in Switzerland, the invoice has to be issued without Swiss VAT. Consequently, the customer has to declare the VAT in its VAT return. In general, the declared VAT can be deducted in the same VAT return (see also section 9).
The reverse charge mechanism also applies in case the customer is a non-taxable person in Switzerland, e.g. a natural person or legal person who does not perform economic activities. However, in those cases the customer is only liable for VAT if the services purchased amount to CHF 10’000.- in a calendar year (i.e. the threshold value). The VAT liability is limited to the purchases in question. On the other hand, the non-taxable person is not entitled to deduct the input VAT due.