VAT on exports and services abroad

Anyone selling goods or services across the border soon runs into a recurring question: do I have to add VAT to the invoice? The answer depends on what you sell, where the supply ends up and, above all, on the evidence you are able to document. In Switzerland the rules are clear, but the formal details make the difference between an exempt transaction and an assessment.

The starting distinction: goods or services

The first thing to understand is whether you are exporting goods or providing services. The two categories follow different logics.

For goods, what counts is the physical movement across the border. For services, what counts instead is where the supply is deemed “carried out” under the place-of-supply rules, which often does not coincide with where you physically work.

Export of goods: exempt but to be proven

The export of goods from Switzerland to abroad is exempt from VAT. This is no small detail: you apply the zero rate, but you nonetheless keep the right to deduct the input tax on the related costs. This is the so-called true exemption.

The exemption, however, is not automatic. You must be able to demonstrate that the goods actually left Swiss territory. The key evidence is the customs export documentation: without the document attesting that the goods left, the administration can treat the transaction as a domestic sale and reclaim VAT at the standard rate of 8.1%.

In practice this means organising the archive so that each export invoice corresponds to its customs evidence. An audit often finds the weak spot right here: invoices “without VAT” lacking the document that justifies the exemption.

Services: the place is what counts

For services the central issue is the place of supply. The general rule, for business-to-business supplies, locates the service where the recipient has its seat. If the client is a business established abroad, the supply is deemed carried out abroad and is not subject to Swiss VAT.

This covers most consultancy activities, digital services and intangible supplies invoiced to foreign clients. The Swiss supplier issues the invoice without VAT and it will be any tax of the client’s country that comes into play, often through the reverse-charge mechanism borne by the recipient.

Beware, however: there are exceptions in which what counts is the place of the property, the place where the service is physically performed or other specific criteria. Services connected to real estate, for example, follow the location of the property, not the client’s seat. Before invoicing without VAT it is worth verifying which category the service really falls under.

The right to deduction remains

An aspect that surprises those coming from abroad: invoicing exempt or outside the scope of VAT does not make you lose the right to deduct the input tax on purchases. Those who export or serve foreign clients still recover the VAT paid on costs, supplies and investments connected to the activity. This prevents the tax from turning into a hidden cost on exports.

The mistakes that cost

In practice the recurring problems are few but frequent:

• Invoicing without VAT without holding the evidence of the export or of the client’s foreign location.
• Confusing the client’s seat with the actual place of the supply, applying the general rule to services that fall under the exceptions.
• Forgetting the purchase of services from abroad: those who buy services from foreign suppliers may have to declare the acquisition tax in Switzerland.
• Disorganised archive: in an audit, missing documentation weighs more than the substantive error.

Why the structure matters

VAT on cross-border operations is not complex because the rates are difficult, but because it interweaves tax law, customs and international rules. A correct set-up from the outset — the right invoice templates, evidence-archiving flows, verification of the place for each type of service — avoids heavy adjustments years later, when recovering the documents has become difficult.

At SIH ONE we analyse your cross-border flows, distinguish what is exempt from what is out of scope, build the appropriate invoice templates and set up the archiving of the customs and contractual evidence that holds up in an audit.

Do you sell goods or services across the border and want to be sure you’re invoicing the right way? Let’s talk about your VAT situation.