VAT on digital supplies and electronic services
Subscription software, cloud storage, online courses, licences, streaming services, remote consulting: the digital economy has made it normal to sell and buy services that cross borders without moving anything physical. VAT, however, remains very attentive to where a supply is deemed provided. For those who sell or purchase electronic services, understanding the place of supply and the subjection obligations is decisive in order not to find yourself exposed.
The place of supply: the recipient rule
For services, including electronic supplies, the general rule in Switzerland is the place-of-recipient principle: the supply is deemed provided where the client has its seat or domicile. This principle governs almost all digital B2B and B2C transactions and determines whether or not a transaction falls under Swiss VAT. Electronic supplies typically include software and updates, hosting and cloud, access to databases, digital content, automated services provided via the internet.
Rate and subjection
Those who provide taxable digital services in Switzerland apply the standard rate of 8.1% (in force since 2024). The obligation to be subject to VAT is triggered when the threshold of CHF 100,000 in worldwide turnover from non-excluded supplies is exceeded. Below this threshold one can remain non-subject (with the option to opt voluntarily for subjection, useful when you want to recover the input tax on purchases).
Buying digital services from abroad
Many Swiss businesses purchase software subscriptions and cloud services from foreign suppliers who do not charge Swiss VAT. Here the acquisition tax (Bezugsteuer) comes into play: the Swiss recipient, if subject to VAT or if it exceeds an annual threshold of purchases of services from abroad, must self-assess the VAT on those services. In practice it declares the tax as if it had invoiced it itself, and can then deduct it as input tax if it has the right to deduction. It is a mechanism often overlooked: foreign digital services seem to be “without VAT”, but the tax may nonetheless be due in Switzerland.
Selling abroad: exempt supplies
Conversely, if a Swiss supplier provides a digital service to a client established abroad, the supply is as a rule outside the scope of Swiss VAT (place of recipient abroad). What remains, however, is the burden of proving where the client is located and its status: contractual documentation, billing data and reliable indicators are necessary to justify the treatment. It should also be considered that the transaction might generate VAT obligations in the client’s country, under its local rules.
Platforms and foreign suppliers into Switzerland
Foreign suppliers who provide electronic services to Swiss clients may be required to register in Switzerland once the worldwide turnover threshold is exceeded, applying VAT to Swiss clients. This is the development by which VAT chases the digital economy, preventing the absence of a physical presence from leaving supplies outside the system. Those who sell through platforms must verify who, between platform and supplier, assumes the VAT obligations.
Frequent mistakes
- Treating foreign cloud services as exempt and not self-assessing the acquisition tax.
- Still applying the old rate instead of 8.1%.
- Not documenting the foreign client’s seat and losing the exemption in an audit.
- Ignoring the subjection obligation once CHF 100,000 is exceeded.
In summary
- The place-of-recipient principle applies to digital services.
- The standard rate is 8.1%; subjection is triggered at CHF 100,000 of turnover.
- Digital purchases from abroad may require the acquisition tax.
- Sales abroad are as a rule out of scope, but must be documented.
How we help you
We analyse your inbound and outbound digital-service flows, determine the correct VAT treatment, manage subjection and acquisition tax, and keep the returns in order. Clarify the VAT of your digital services.