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Old 10.10.2017, 12:20
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VAT Liability in this situation

Hello,

I have permit which does not allow me to make any permanent business in Switzerland, meaning offering services to Swiss companies. So i do not interfere with Swiss consultation markets in anyway, absolutely zero turnover.

However, considering that consultancy is made abroad but the company which pays the invoice is a Swiss company and annual sales with this client is more than the VAT limit of 100000 CHF.

Would i be considered VAT liable for this even that the no parts of the work is done in Switzerland, only money comes from Swiss company to Swiss company?

New VAT law comes in force 2018, but as far as i have read the form of it, changes of it mostly consider VAT liability of foreign companies doing business in Switzerland and global turnover defines the VAT liability.
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Old 10.10.2017, 12:34
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Re: VAT Liability in this situation

So you are not allowed to have a company in Switzerland or to offer services to companies in Switzerland, you have a Swiss permit, all the work is done outside Switzerland yet you use your Swiss company to bill your Swiss cliént?

I so am not understanding your story...
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Old 10.10.2017, 12:49
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Re: VAT Liability in this situation

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So you are not allowed to have a company in Switzerland or to offer services to companies in Switzerland, you have a Swiss permit, all the work is done outside Switzerland yet you use your Swiss company to bill your Swiss cliént?

I so am not understanding your story...
Many thanks for your comment and questions. I am not allowed to offer services to companies or private persons in Switzerland as i have residence permit with terms of 'without lucrative work'.

But yes correct, all the work is done or bought from parties outside Switzerland by my Swiss company. But i would use my Swiss company to invoice clients Swiss company which is buying the services.
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Old 10.10.2017, 12:55
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Re: VAT Liability in this situation

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Many thanks for your comment and questions. I am not allowed to offer services to companies or private persons in Switzerland as i have residence permit with terms of 'without lucrative work'.
That sentence does not forbid you anything, it just says that you had no job when you got your permit.

What permit do you have and exactly what does it say?
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Old 10.10.2017, 13:19
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Re: VAT Liability in this situation

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That sentence does not forbid you anything, it just says that you had no job when you got your permit.

What permit do you have and exactly what does it say?
https://secure.bs.ch/web/bdm/Wohnen/...aetigkeit.html


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Would i be considered VAT liable for this even that the no parts of the work is done in Switzerland, only money comes from Swiss company to Swiss company?
I would say no Swiss VAT is due, when you were aboard and delivered the work to the foreign branch. You would have at least to specify the place of fulfillment on the bill. Maybe better if you even bill the branch directly. You may be subject to VAT in the foreign country.

See the TVA info, plus subsequent pages:
https://www.gate.estv.admin.ch/mwst-...nentId=1057617

But is it legal and compatible with your permit that your business is domiciled here in Switzerland? That seems to be strange.
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Old 10.10.2017, 13:20
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Re: VAT Liability in this situation

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That sentence does not forbid you anything, it just says that you had no job when you got your permit.

What permit do you have and exactly what does it say?
Thank you for your comment.

I do not have right to work in Switzerland, it says 'sans activite lucrative'. In order to work or to make business in Switzerland my permit would have to be re-applied and changed.

This affects my companies as well. As i am the only boardmember, my companies are also restricted from owning properties (LFAIE law) and it is also denied to establish any permanent place of business in Switzerland as i am the only person responsible and i do not have right to do so without change of permit.
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Old 10.10.2017, 13:23
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Re: VAT Liability in this situation

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But is it legal and compatible with your permit that your business is domiciled here in Switzerland? That seems to be strange.
Thank you for the info. Yes it is possible to operate an company if no salary for work is received from it.
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Old 10.10.2017, 13:23
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Re: VAT Liability in this situation

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Thank you for your comment.

I do not have right to work in Switzerland, it says 'sans activite lucrative'. In order to work or to make business in Switzerland my permit would have to be re-applied and changed.

This affects my companies as well. As i am the only boardmember, my companies are also restricted from owning properties (LFAIE law) and it is also denied to establish any permanent place of business in Switzerland as i am the only person responsible and i do not have right to do so without change of permit.
You have a company in Switzerland, of which you are the only director, despite the fact that you are not allowed (yet) to work and that the company would have to have a Swiss director most likely? Are you EU or non EU?
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Old 10.10.2017, 14:09
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Re: VAT Liability in this situation

Mine says:

Quote:
Aufenhaltszweck
Berechtigt fur stellensuche
ohne Erwerbstätigkeit
And on the back:
Quote:
Diese aufenthaltsbewilligung gilt für die ganze Schweiz. Für den stellen- und berufswechsel wird keine Bewilligung benötigt.
(A lot of non-relevant info about adreschange and such which I leave out.)
Der Arbeitgeber ist verpflichtet, die Anstellung der inhaberin oder des inhabers dieses Ausweises innerhalb van 8 tagen der zuständigen Steuerbehörde zu melden. er haftet für die Entrichtung der Quellensteuer.
So mine says "Ohne Erwerbstätigkeit" but to me this means that I am allowed to be here without my own income, and working is permitted. And I have done some small jobs for fun which gave zero problem.

Which is why I asked OP for the exact text on his permit.
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Old 10.10.2017, 14:22
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Re: VAT Liability in this situation

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But yes correct, all the work is done or bought from parties outside Switzerland by my Swiss company. But i would use my Swiss company to invoice clients Swiss company which is buying the services.
In which case that company, the one sending out invoices, would indeed need to be VAT registered, as it's the company turnover, not the source of its goods or services, that matters. And all invoices would then need VAT adding on top, again regardless of the source of the goods or services that your company is selling on.

But it does sound like you're treading a fine line here - indeed it sounds like you're way over the line, performing services which are initially billed as taking place outside CH then selling them on via your Swiss company to Swiss clients, presumably at a break-even point to avoid making profits.

Be aware that if you think you've found a loophole, and that you're bringing that money into CH as non-earned (in CH) income you're almost certainly going to be in serious trouble if authorities find out. And being a director of a non-profitable company with a high turnover is going to raise that possibility of being investigated quite considerably, I should think.

Of course, just because it sounds like this is what you're planning does not make it the case, I do appreciate.
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Old 10.10.2017, 15:16
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Re: VAT Liability in this situation

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In which case that company, the one sending out invoices, would indeed need to be VAT registered, as it's the company turnover, not the source of its goods or services, that matters. And all invoices would then need VAT adding on top, again regardless of the source of the goods or services that your company is selling on.

But it does sound like you're treading a fine line here - indeed it sounds like you're way over the line, performing services which are initially billed as taking place outside CH then selling them on via your Swiss company to Swiss clients, presumably at a break-even point to avoid making profits.

Be aware that if you think you've found a loophole, and that you're bringing that money into CH as non-earned (in CH) income you're almost certainly going to be in serious trouble if authorities find out. And being a director of a non-profitable company with a high turnover is going to raise that possibility of being investigated quite considerably, I should think.

Of course, just because it sounds like this is what you're planning does not make it the case, I do appreciate.
Thank you for your prompt answer.

There is no extra profit for me either way, vat or not.
So i do not think that there is a loophole neither am i searching one. I will have to pay for the work done outside Switzerland - outside Switzerland, that fact remains unchanged.

It is just that is it even possible for me to do that transaction like described or should i just use my foreign companies to do that. It does not make any difference to me is the VAT added or not, it is just that it has to be made in a right way from the start.

But it is interesting as the company working based on resident permit like this has much limitations. Basically i cant do anything with this company in Switzerland except to buy from Swiss providers. That fine line is very fine as no work is done in Switzerland in this scenario.
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Old 10.10.2017, 15:25
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Re: VAT Liability in this situation

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You have a company in Switzerland, of which you are the only director, despite the fact that you are not allowed (yet) to work and that the company would have to have a Swiss director most likely? Are you EU or non EU?
I am also EU citizen and exact form is that Swiss resident is something needed to be a boardmember. I am Swiss resident, so company status is ok.

But this line that is it against my permit that transaction is made with Swiss company and is it under VAT as all the work is done outside Switzerland. It does gain profit to Swiss company, but this problem needs to be solved before i can do anything. I have read the VAT laws but this seems to be kind of special case, so no direct answer was found.

Maybe i talk directly with tax office and ask them kindly to decide the right way.
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Old 10.10.2017, 15:32
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Re: VAT Liability in this situation

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I am also EU citizen and exact form is that Swiss resident is something needed to be a boardmember. I am Swiss resident, so company status is ok.

But this line that is it against my permit that transaction is made with Swiss company and is it under VAT as all the work is done outside Switzerland. It does gain profit to Swiss company, but this problem needs to be solved before i can do anything. I have read the VAT laws but this seems to be kind of special case, so no direct answer was found.

Maybe i talk directly with tax office and ask them kindly to decide the right way.
Swiss citizen, not resident.
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Old 10.10.2017, 15:35
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Re: VAT Liability in this situation

If a Swiss legal entity is billing another Swiss entity, it is liable for TVA. The legal entity outside CH 'providing' the work is not.

If your Swiss company is getting the work done outside CH, AND billing a foreign entity, the Swiss company HAS to file a TVA return claiming exemption for export turnover.
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Old 10.10.2017, 15:44
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Re: VAT Liability in this situation

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Swiss citizen, not resident.
Thank you for the comment. To what is this information based on? And how come companies are registered with Swiss resident boardmembers if Swiss citizen is needed?
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Old 10.10.2017, 15:49
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Re: VAT Liability in this situation

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Thank you for the comment. To what is this information based on? And how come companies are registered with Swiss resident boardmembers if Swiss citizen is needed?
Because there is a difference between being a resident and being Swiss
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Old 10.10.2017, 15:56
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Re: VAT Liability in this situation

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If a Swiss legal entity is billing another Swiss entity, it is liable for TVA. The legal entity outside CH 'providing' the work is not.

If your Swiss company is getting the work done outside CH, AND billing a foreign entity, the Swiss company HAS to file a TVA return claiming exemption for export turnover.
This is exactly what I was thinking. And I also can't understand how the OP can be a (sole?) director and shareholder of a Swiss company if he doesn't have permission to work here.
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Old 10.10.2017, 16:22
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Re: VAT Liability in this situation

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how come companies are registered with Swiss resident boardmembers if Swiss citizen is needed?
Because they have at least one board member who is a Swiss citizen.

Tom
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Old 10.10.2017, 16:26
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Re: VAT Liability in this situation

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Because they have at least one board member who is a Swiss citizen.

Tom
Ok

I might be mixing something now or not writing in adequate precision.
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Old 10.10.2017, 17:14
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Re: VAT Liability in this situation

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It is just that is it even possible for me to do that transaction like described or should i just use my foreign companies to do that.
I would strongly suggest you go and get proper professional advice, because honestly some of your interpretations sound off!

For example, if you are the sole director and conduct operations through a foreign company it is most likely that the company will be considered Swiss resident because it can not operate independently of you.

Under normal circumstances VAT is charged on services at the place of supply, however what you seem to be describing is a situation where a Swiss company is contracting for the supply of services from another possibly Swiss residence company at a foreign location by a Swiss resident... not even close to the normal situation!
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