Invoicing and Tax regulation in Switzerland

Switzerland initiated the modernization of its transaction processes in 2016 by implementing mandatory B2G e-invoicing for transactions over CHF 5,000. While B2C and B2B e-invoicing remain optional for now, many companies choose to make the transition earlier. They have recognized significant savings in terms of money, time, and reduction in manual errors, which are particularly prevalent in tax reporting. Given the standard VAT rate in the Switzerland at 8.1% and corporate tax rate ranging from 12% to 24%, minimizing errors is crucial to avoid increased liabilities and penalties.

 

To ensure you're meeting the requirements while optimizing your financial strategy, explore our comprehensive guide on (e-)invoicing, tax regulations, and digital reporting in Switzerland.

 

Invoicing Regulations in Switzerland

Invoicing regulations in Switzerland are managed by the Federal Tax Administration (FTA) under the guidance of the Swiss Value Added Tax Act (Mehrwertsteuergesetz, MWSTG). Invoices are required for all transactions involving the sale of goods or services, applicable to both B2B and B2C dealings. Customers must receive invoices upon the delivery of goods or completion of services, except for transactions where the customer is another business, in which case invoices are generally issued within 30 days of the delivery or service. Moreover, VAT-registered businesses must issue VAT invoices for all taxable sales, complying with Swiss tax laws and regulations.

At a minimum, the invoice needs to include:

Date of Issue;

Date of Supply;

Unique Invoice Number;

Supplier Information: Full name and address of the business and VAT identification number (UID);

Customer Information: Full name and address;

Description of Goods or Services;

Quantities and Unit Prices: The quantity and price per unit, excluding VAT;

Total amount and Tax Details: VAT applied, If different VAT rates are applicable, the amount of VAT should be shown separately for each rate; VAT amount payable, total amount excluding VAT, total amount including VAT;

Payment Terms.

 

B2G Invoice Specifications

For B2G transactions over CHF 5,000 you have to issue e-invoices.

 

B2C Invoicing

For most B2C transactions you can issue simplified invoices, which require less information compared to full invoices.

 

Simplified Invoices

In Switzerland, you can issue simplified invoices for transactions where the total invoice amount does not exceed CHF 400.

Simplified invoices include:

Date of issuance,

Supplier information: name and address,

Description of the goods or services,

Total amount payable and the VAT amount.

 

Invoices Archiving

In Switzerland, you are required to retain invoices for a period of 10 years, starting from the end of the last tax year to which they relate. Archiving abroad is allowed under specific conditions, ensuring compliance with Swiss regulations regarding accessibility and data protection.

 

 

E-invoicing Regulations

Electronic invoicing, or e-invoicing, is the digital exchange of invoice information between a supplier and a buyer. Creating electronic invoices involves a streamlined process that includes the use of specialized software for generating invoices, selecting the appropriate electronic invoice formats, and choosing a transmission method such as the Peppol web service or email. This process not only facilitates the efficient submission and validation of invoices but also ensures that recipients are promptly notified, significantly enhancing the invoicing workflow for businesses.

In 2016, Switzerland implemented mandatory B2G e-invoicing for transactions over CHF 5,000. While B2C and B2B e-invoicing remain optional for now, numerous companies have proactively embraced e-invoicing. The benefits of e-invoicing include improved efficiency, faster payments, and compliance with tax authority regulations, making it superior to traditional paper invoicing.

Swiss e-invoicing regulations align with Directive 2014/55/EU, which mandates public entities to be equipped to receive and process e-invoices that adhere to the European standard EN-16931. Furthermore, Switzerland participates in the PEPPOL network, enhancing standardized cross-border e-invoicing within the EU through the use of electronic invoices and electronic invoicing. To support these requirements, the Swiss government utilizes E-RECHNUNG, an invoice submission portal designed for the receipt and processing of e-invoices in dealings with public sector entities, including federal contracting authorities.

 

E-invoicing Process

In Switzerland, the suppliers must register with a certified E-Invoicing Service Provider (ESP) that is recognized by the Swiss Federal Tax Administration (FTA). The process for electronic invoicing involves several key steps. Here's an outline of the process:

Completing a transaction and entering invoice data: Swiss suppliers are required to accurately enter invoice data and submit electronic invoices within a specified timeframe, typically immediately after a transaction is completed;

Upon submission: The ESP reviews the electronic invoice to ensure it meets the required standards and formats. This includes validating transaction details and ensuring compliance with legal requirements;

After validation: The supplier receives a confirmation that the invoice has been accepted, often including a unique identification number assigned to the invoice for tracking purposes.

The customer receives this confirmation: which includes the unique identification number and details confirming that the invoice has been successfully submitted and is under processing.

Customers or other interested parties can verify the transaction: through the ESP’s web application, which provides options to view the status of the invoice and access detailed information about the invoicing process.

 

Governmental Body Responsible for E-invoicing

The governmental body responsible for e-invoicing in Switzerland is Federal Finance Administration (FFA).

 

E-invoicing Formats

Switzerland aligns its e-invoicing formats with the European standard EN 16931. The system for e-invoicing in Switzerland is managed by the Federal Finance Administration (FFA) and utilizes several recognized e-invoicing formats.

E-invoicing formats commonly used in Switzerland:

Swiss Implementation Guidelines (eCH-0095)	A national standard based on EN 16931, providing a framework for electronic invoicing within Switzerland. It ensures the standardization of data elements and formats.
PEPPOL BIS Billing 3.0	An internationally recognized standard, providing a unified XML-based specification for electronic billing across Europe.
Factur-X / ZUGFeRD	A hybrid e-invoicing format that combines PDF/A-3 and XML data, ensuring compatibility with both human-readable and machine-processing requirements.

 

E-invoices Validating

Ensure that your e-invoices adhere to the European standard EN 16931 as well as specific Swiss requirements. Further validation of e-invoices is mandatory in Switzerland, which includes the use of digital signatures.

It is mandatory to include a QR code on all e-invoices issued within Switzerland. This QR code facilitates immediate access to invoice details for both tax authorities and taxpayers.

Alongside the QR code, the digital signature is another essential element of the e-invoice. The digital signature, required by the Swiss Electronic Signatures Act, ensures the authenticity and integrity of the invoice.

 

E-invoice Archiving

You must archive E-invoices for a minimum period of 10 years, with archiving abroad being allowed under certain conditions.

 

 

Tax Regulations

The standard VAT rate in Switzerland is 8.1%, applicable to most goods and services. A reduced VAT rate of 2.6% applies to specific goods and services, such as food, books, and newspapers. Additionally, a special rate of 3.7% applies to accommodation services.

 

Corporate Tax

The federal corporate tax rate in Switzerland is 8.5% on profit, with additional Cantonal and Municipal rates varying. The combined effective rate generally ranges between 12% and 24%.

 

VAT on Digital Products

In Switzerland, the VAT rate applied to digital products, such as downloadable software, or online services, is generally subject to the standard VAT rate of 8.1%.

 

 

VAT Payments and Returns

In Switzerland, businesses are also required to file a VAT Return (Mehrwertsteuerabrechnung) with the Swiss Federal Tax Administration (FTA) to declare the VAT they have collected and the VAT they have credited for business purchases. The VAT Return should detail:

VAT collected on sales,

VAT credits for VAT paid on business purchases.

The net VAT amount, which is the difference between the VAT collected on sales and the VAT credits on purchases, is indicated on the VAT Return and must be paid to the Swiss Federal Tax Administration. If the VAT credits exceed the VAT collected, the business can claim a refund.

The reporting frequencies are:

Quarterly: This is the standard reporting frequency for most businesses. Reports must be submitted by the 60th day following the end of the quarter.

Semi-Annually: Available for small businesses with an annual turnover of less than CHF 5,005,000 and an annual VAT liability of less than CHF 103,000. Reports must be submitted by the 60th day following the end of the half-year.

Annually: Applicable under special circumstances and upon request, subject to approval by the FTA. Reports must be submitted by the 60th day following the end of the year.

The Swiss Federal Tax Administration encourages electronic filing of VAT Returns and Payments through its online platform (AFC SuisseTax).

 

VAT Registration Threshold

VAT registration threshold for domestically established businesses is CHF 100,000.

Foreign based businesses engaged in distance selling of goods or services to Swiss consumers, the threshold is CHF 100,000.

 

 

E-invoice Requirements

E-invoices in Switzerland are demanding components such as:

Date of Issue;

Date of Supply;

Unique Invoice Number;

Supplier Information: Full name and address of the business and VAT identification number (UID);

Customer Information: Full name and address;

Description of Goods or Services;

Quantities and Unit Prices: The quantity and price per unit, excluding VAT;

Total amount and Tax Details: VAT applied, If different VAT rates are applicable, the amount of VAT should be shown separately for each rate; VAT amount payable, total amount excluding VAT, total amount including VAT;

Currency:

Payment Terms;

Additional Legal Requirements.

For businesses with repeating customers, setting up recurring invoices can streamline the billing process by automating regular, automatic payments.

 

Utilizing invoicing software can significantly benefit businesses in creating, sending, and managing e-invoices in compliance with German regulations. These tools not only help in generating professional invoices but also in streamlining the invoicing process, improving cash flow, and ensuring that payments are received on time.

See how Space Invoices can help.

 

B2C E-invoice Specifications

For most B2C transactions you can issue simplified e-invoices, which require less information compared to full invoices.

 

Simplified E-invoice Requirements

In Switzerland, you can issue simplified e-invoices for transactions where the total invoice amount does not exceed CHF 400.

Simplified invoices include:

Date of issuance,

Supplier information: name and address and VAT,

Description of the goods or services,

Total amount payable and the VAT amount.

 

 

Digital Reporting R

Businesses registered for VAT in Switzerland are required to submit a VAT Return electronically via the Federal Tax Administration's (FTA) online service. This can be done directly through the FTA's portal, using business software that integrates this functionality, or through a tax agent.

Additionally, businesses are encouraged to maintain electronic records of all transactions to meet the standards set by the Swiss tax authorities. These records are vital for audit purposes and must be retained for a minimum of ten years.

 

SAF-T

SAF-T is not yet mandatory in Switzerland.

 

Data Breaches

If a data breach occurs in Switzerland, you must notify the Federal Data Protection and Information Commissioner (FDPIC) as soon as possible after becoming aware of the incident. If the breach poses a high risk to individuals' rights and freedoms, affected individuals must also be notified without undue delay.

 

 

Penalties

Penalties for late submission can include a fine based on the amount of VAT due. Typically, fines can be up to CHF 800 or more, depending on the severity and frequency of the delay.

If an incorrect VAT return leads to an underpayment of VAT, the business must pay the owed amount plus interest. The interest rate for underpaid VAT is typically around 4% per annum.

 

Invoicing Penalties

Businesses issuing invoices that do not meet legal requirements may be fined. Penalties can vary but are often in the range of CHF 200 to CHF 2,000 per invoice, depending on the nature and frequency of the errors.

Failing to issue an invoice where required can lead to fines. The specific amount depends on the cantonal regulations but can typically range from CHF 500 to CHF 10,000.

 

E-Invoicing and Digital Reporting Penalties

For transactions involving the public sector, failure to comply with e-invoicing mandates can lead to penalties. Specific fines may vary, but can be several hundred francs per infraction.

Fines for failing to maintain proper digital records or non-compliance with digital reporting requirements can range from CHF 200 to CHF 10,000, depending on the severity and the nature of the non-compliance.

Fines for data protection violations can be up to CHF 250,000.

 

 

Streamline Global Invoicing and Digital Reporting with Space Invoices

One way to comply with (e-)invoicing, tax and reporting requirements in Switzerland is to use a provider like Space Invoices.

You will be able to:

Utilize a single API for current and future worldwide compliance, including in Switzerland

Support and upsell your clients globally, including in Switzerland

Become the one-stop shop for current and future clients

Streamline processes to save time and reduce costs, while also eliminating manual errors

Rest assured all documents are properly archived and reported to the relevant authorities

Achieve rapid integration, typically completed in less than a week.

 

Having questions about how to achieve compliance in Switzerland?

We are here to assist.

 

 

This guide is provided by Space Invoices and does not constitute professional tax advice or opinions tailored to the specifics of any particular business or situation. Space Invoices does not accept responsibility for the accuracy or applicability of the content within this guide. Tax regulations, e-invoicing requirements, and digital reporting standards are subject to frequent changes and complex interpretations that require validation by qualified tax professionals. It is the user's responsibility to evaluate the relevance and accuracy of the information provided and to consult appropriate professionals. Space Invoices does not offer professional tax opinions or advice through this publication.

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