Invoicing in Switzerland by a Foreign Company

VAT Rules, Permanent Establishment Risks and Formal Invoice Requirements

Invoicing Swiss clients from a foreign company is fully possible. However, it requires a precise legal and VAT analysis to avoid tax reassessments, penalties, or unintended permanent establishment exposure.

Three key elements determine the applicable obligations:

• The nature of the transaction (services or goods)

• The type of client (B2B or B2C)

• The existence of an economic presence in Switzerland

I. VAT Treatment of Services Supplied to Swiss Clients

1. B2B Services (Swiss Company as Client)

General Rule – Place of Supply

Under Article 8 of the Swiss VAT Act (LTVA), the place of supply for services is generally the place where the recipient is established.

Practical consequence:

• The foreign company invoices without foreign VAT

• No Swiss VAT is charged

• The Swiss client accounts for VAT under the reverse charge mechanism

This applies to services such as:

• Consulting

• IT services

• Marketing

• Management fees

• Legal services

• Digital services

In this scenario, the foreign company is generally not required to register for Swiss VAT.

Recommended Invoice Wording

“VAT due by the recipient under the reverse charge mechanism – Art. 45 Swiss VAT Act.”

2. B2C Services (Private Clients in Switzerland)

The situation differs when services are provided to individuals.

Depending on the nature of the service, the place of supply may be considered Switzerland.

VAT Registration Threshold

A foreign company must register for Swiss VAT if:

• Its worldwide taxable turnover exceeds CHF 100,000 per year

• It provides taxable supplies in Switzerland

Important: the threshold is based on global turnover, not Swiss turnover alone.

Obligations After Registration

• Obtain a Swiss VAT number

• Appoint a Swiss fiscal representative

• Provide a bank guarantee

• File periodic VAT returns

• Charge Swiss VAT on invoices

II. Sale of Goods Delivered to Switzerland

1. Import of Goods

If a foreign company sells goods physically delivered into Switzerland:

• Import VAT is due at customs

• If the foreign company acts as importer of record, Swiss VAT registration is generally required

This entails:

• Swiss VAT number

• Swiss fiscal representative

• Bank guarantee

• VAT compliance obligations

2. Domestic Supply After Import

If the foreign company imports goods in its own name and resells them within Switzerland, it performs a domestic taxable supply.

Swiss VAT must then be charged (currently 8.1% standard rate).

III. Permanent Establishment Risk

Beyond VAT, a foreign company may create a permanent establishment in Switzerland if it has:

• A permanent office

• An employee with decision-making authority

• Effective management exercised from Switzerland

• A stable operational infrastructure

Consequences

• Corporate income tax liability in Switzerland

• Local accounting obligations

• Possible registration with the Commercial Register

• Social security obligations

Each case must be analyzed in light of applicable double tax treaties.

IV. Mandatory Invoice Requirements Under Swiss VAT Law

A compliant invoice must include the following:

1. Identification of the Parties

• Full name and address of the supplier

• Full name and address of the client

• Swiss VAT number (if registered)

2. Transaction Details

• Date or period of supply

• Invoice issuance date

• Clear description of goods or services

• Amount charged

3. VAT Information

If registered in Switzerland:

• Applicable VAT rate (e.g., 8.1%)

• VAT amount shown separately

• Swiss VAT number in the format CHE-xxx.xxx.xxx VAT

If reverse charge applies:

• Clear statement that VAT is due by the recipient

4. Currency

Invoices may be issued in foreign currency, but Swiss VAT must be declared in CHF.

V. Common Mistakes

• Charging foreign VAT to a Swiss B2B client

• Ignoring the CHF 100,000 global threshold

• Failing to appoint a Swiss VAT representative

• Confusing import VAT with domestic VAT

• Omitting mandatory invoice elements

These errors may result in:

• VAT reassessments

• Late payment interest

• Administrative penalties

• Denial of input VAT deduction for the Swiss client

FAQ

Can a foreign company freely invoice a Swiss company?

Yes. In B2B services, reverse charge usually applies, and no Swiss VAT is charged by the foreign supplier.

Does the CHF 100,000 threshold apply only to Swiss turnover?

No. It applies to worldwide taxable turnover.

Is a Swiss fiscal representative mandatory?

Yes, once a foreign company becomes subject to Swiss VAT.

Can invoices be issued in EUR or USD?

Yes. However, VAT must be reported in CHF.

Does having one employee in Switzerland automatically create a permanent establishment?

Not automatically, but it significantly increases the risk depending on the employee’s authority and functions.

Conclusion

Invoicing in Switzerland by a foreign company is legally feasible but requires careful structuring.

A prior assessment should determine:

• Whether Swiss VAT registration is required

• Whether permanent establishment risk exists

• Whether invoices comply with Swiss formal requirements

A proper setup from the outset prevents significant tax exposure and compliance risks.