Advertising law update: On January 1, 2025, the partial revision of the Value Added Tax Act (MWSTG) and the Value Added Tax Ordinance (MWSTV) adopted by parliament came into force. An important change concerns the introduction of platform taxation, the basic features of which are explained below.
What is it about?
Since the last VAT revision came into force in 2019, mail order companies that deliver goods to Switzerland have been subject to VAT if they generate at least CHF 100,000 in sales with small consignments (VAT import tax amount less than CHF 5). However, since many smaller mail order companies have not reached this sales limit, the effect of this measure has remained limited.
Now, companies that enable the sale of items via an electronic platform will also be included in the VAT liability. In the future, such companies will be regarded as service providers for all sales of goods brokered via their platforms – regardless of whether they are based in Switzerland or abroad.
Who is Affected?
Electronic platforms are electronic interfaces that enable direct online contact between several people with the aim of providing a delivery or service. Anyone who operates such a platform, bringing buyers and sellers together and enabling the sale of items, will be regarded as a service provider to the buyer under the new regulation and must, in principle, pay VAT on the delivery to the domestic buyer.
Only platforms that enable the sale of items are affected. In contrast, platforms that broker services or the rental of items are not affected.
Operators who only perform supporting functions, such as payment processors, advertising portals, advertising service providers or pure brokerage platforms without a direct ordering process, are also not subject to platform taxation.
How Does Platform Taxation Work?
From a VAT perspective, two fictitious transactions arise when a sale is made via an electronic platform:
- Between the original seller and the platform: The platform is considered the buyer of the product.
- Between the platform and the buyer: The platform resells the product and qualifies as a service provider to the (domestic) buyer. It is therefore responsible for collecting and remitting VAT.
When Does a Platform Become Liable for VAT?
An electronic platform is subject to VAT in Switzerland if it:
- generates at least CHF 100,000 in annual sales from taxable services and
- either has its registered office in Switzerland or
- provides services whose place of performance is in Switzerland (e.g. if the items sold are already stored in Switzerland or the platform imports small consignments with a total value of over CHF 100,000 into Switzerland).
Consequences for Platform Operators and Sellers
From January 1, 2025, mail order platforms must collect VAT on all sales to domestic customers processed via their (VAT-liable) electronic platform and remit it to the FTA.
The FTA may take administrative measures against platform operators who do not register properly or fail to meet their tax obligations. These measures can range from import bans to destruction of the goods.
Sellers who sell their products via electronic platforms should check whether they still have to charge VAT or whether this obligation is now transferred to the platform. As they are subsidiarily liable for unpaid VAT relating to their platform sales, sellers should ensure that the platform is registered for VAT purposes and that the VAT due is properly paid.
This article is part of a series of updates and developments in advertising law:
- Advertising Law Update 1: Amendment to the Price Disclosure Ordinance – more flexibility in advertising with discounts
- Advertising Law Update 2: New rules for green claims in advertising
- Advertising Law Update 3: New Swiss youth protection rules for streaming services
- Advertising Law Update 4: Partial revision of the Value Added Tax Act: Introduction of platform taxation as of January 1, 2025 (current article)
