VAT and digital sales: a complex landscape
The sale of digital goods and services — SaaS software, e-books, streaming, apps, cloud licences — is subject to specific VAT rules that differ significantly from those applicable to physical goods. In Switzerland, the Federal Act on Value Added Tax (LTVA, art. 8 and 18) and the related Ordinance (OTVA) define the VAT treatment of electronically supplied services, including specific criteria for the place of supply and registration obligations.
For a Swiss company selling SaaS or digital products to customers across Europe, the challenges are manifold: determining where VAT is due (destination principle), managing different rates for each country, complying with the CHF 100,000 threshold for foreign sellers, and correctly applying the reverse charge mechanism for cross-border B2B transactions.
This guide analyses in detail the Swiss VAT rules for digital sales, the relationship with the EU system (OSS/IOSS), and best practices for invoicing and compliance, with practical examples designed for SaaS, e-commerce and digital platforms operating from or towards the Swiss market.
Digital goods vs. physical goods: VAT treatment
The LTVA distinguishes between electronically supplied services and supplies of physical goods. The classification determines the place of supply, the applicable rate and the reporting obligations:
| Product type | VAT treatment | Place of supply | Swiss rate |
|---|---|---|---|
| Software / SaaS | Electronically supplied service (art. 8 para. 1 LTVA) | Recipient's domicile | 8.1% (standard rate) |
| E-books / digital content | Electronically supplied service | Recipient's domicile | 2.6% (reduced rate) |
| Streaming / music / video | Electronically supplied service | Recipient's domicile | 8.1% (standard rate) |
| Physical goods shipped | Supply of goods (art. 7 LTVA) — import subject to VAT | Place of delivery / import | 8.1% or 2.6% depending on goods |
| Mixed bundle (digital + physical) | Mandatory separation: each component follows its own rules | Varies by component | Respective rate per component |
Place of supply: where VAT is due
For electronically supplied services, the LTVA applies the destination principle (art. 8 para. 1). The rules vary depending on the type of customer and their location:
B2C to Swiss customers
When a business (Swiss or foreign) sells digital services to a private consumer in Switzerland, Swiss VAT is due. The foreign seller must register with the FTA if it exceeds the CHF 100,000 worldwide turnover threshold.
B2B to Swiss businesses
If the recipient is a VAT-registered Swiss business, the supply is taxable in Switzerland. For services purchased from abroad, the Swiss business applies the reverse charge (acquisition tax, art. 45 LTVA) if the supplier is not registered in Switzerland.
Sales to EU customers (B2C)
A Swiss SaaS selling to private consumers in the EU must charge the VAT of the consumer's country. As Switzerland is not part of the EU, it cannot use the OSS regime: VAT registration in each member state where thresholds are exceeded is required, or the appointment of a fiscal representative.
Sales to EU businesses (B2B)
For B2B sales to EU businesses, the reverse charge applies: the purchasing EU business self-assesses VAT in its own country. The Swiss SaaS issues an invoice without VAT, noting the reverse charge and the customer's VAT identification number.
Destination principle and evidence
The seller must document the recipient's location with at least two consistent pieces of evidence: billing address, IP address, credit card country, telephone prefix. For B2B, the customer's VAT identification number constitutes sufficient proof.
CHF 100,000 threshold for foreign sellers
Since 2018 (LTVA revision), foreign businesses providing electronically supplied services to recipients in Switzerland are subject to mandatory VAT registration with the FTA if they exceed certain thresholds:
Registration threshold (art. 10 para. 2 let. d LTVA)
A foreign business achieving worldwide turnover of at least CHF 100,000 (from all activities, not just Swiss ones) and providing electronically supplied services to recipients in Switzerland must register with the FTA and charge Swiss VAT.
Deemed supplier for platforms (art. 20a OTVA)
Digital platforms (marketplaces, app stores) that facilitate the sale of third-party electronic services are considered the 'deemed supplier': they must declare and remit Swiss VAT as if they were the actual seller.
Reporting obligations
The registered foreign seller must file quarterly VAT returns with the FTA (effective or flat-rate method), retain documentation for 10 years, and appoint a fiscal representative in Switzerland with a Swiss domicile.
Turnover calculation
The CHF 100,000 threshold is calculated on the company's total worldwide turnover (not just Swiss sales). Even a few sales in Switzerland can trigger the obligation if the business has high global revenue.
Warning: since 2025 the FTA has intensified audits of unregistered foreign digital businesses. Platforms such as marketplaces and app stores must verify the VAT status of third-party sellers. Failure to register results in penalties and retroactive tax recovery with default interest (5%).
Reverse charge (acquisition tax)
The reverse charge mechanism (Bezugsteuer / acquisition tax, art. 45 LTVA) shifts the VAT declaration obligation from the foreign supplier to the Swiss buyer. It is essential for Swiss businesses purchasing digital services from abroad:
When it applies (art. 45 para. 1 LTVA)
Acquisition tax applies when a VAT-registered Swiss business purchases services (including electronic services) from a foreign supplier not registered for VAT in Switzerland, and the value of the supplies exceeds CHF 10,000 in the calendar year.
How it works in practice
The Swiss business declares the acquisition tax in its own VAT return (line 381 of the FTA form). The tax calculated at the Swiss rate (8.1%) is simultaneously declared as tax due and, if the business is entitled to full deduction, as deductible input tax — with a neutral effect on the VAT account.
Practical example: foreign SaaS
A Zurich company purchases a SaaS subscription from a US provider for CHF 1,200/year. The provider is not VAT-registered in Switzerland. The company declares CHF 97.20 (8.1% of 1,200) as acquisition tax and, if entitled to full deduction, deducts it as input tax in the same return.
Exceptions and limits
The reverse charge does not apply if the foreign supplier is already VAT-registered in Switzerland (in which case it invoices with Swiss VAT), nor for purchases below CHF 10,000/year. Businesses not subject to VAT (e.g. exempt doctors, trainers) must still declare acquisition tax if they exceed the threshold.
EU OSS, IOSS and Switzerland: regime comparison
Switzerland is not part of the EU and does not participate in the simplified OSS (One-Stop Shop) and IOSS (Import One-Stop Shop) regimes. This creates specific complexities for Swiss businesses selling to EU customers and vice versa:
| Regime | When it applies | Registration |
|---|---|---|
| EU OSS (One-Stop Shop) | B2C sale of digital services from an EU business to consumers in other EU states | Single registration in the member state of establishment — not available to Swiss businesses |
| EU IOSS (Import One-Stop Shop) | B2C sale of goods imported into the EU with value ≤ €150 | Registration via EU intermediary — available to non-EU businesses (including Switzerland) with a representative |
| Direct EU VAT registration | B2C sale of digital services from a Swiss business to EU consumers | Mandatory registration in each member state with B2C customers, or Non-Union OSS regime via a single member state |
| Non-Union OSS (non-EU regime) | B2C digital services supplied by a non-EU business to consumers in the EU | Registration in a single member state of choice — available to Swiss businesses to simplify EU VAT compliance |
Correct invoicing for digital sales
Invoices for electronically supplied services must contain specific information to ensure VAT compliance and facilitate FTA audits (art. 26 LTVA):
Seller's VAT number
The invoice must show the Swiss VAT number (format CHE-123.456.789 MWST/TVA/IVA) or, for B2B sales to the EU, the seller's VATIN if registered in a member state.
VAT rate and amount
Clearly state the applied rate (8.1% standard, 2.6% reduced) and the separate VAT amount. For exempt or reverse-charge supplies, specify the reason for exemption.
Reverse charge notation
For cross-border B2B sales under reverse charge, the invoice must include the notation 'Reverse charge' (or equivalent in the relevant language) and the customer's VAT number.
Description of the supply
Clearly describe the nature of the digital service provided: licence type, subscription period, pricing model. The FTA requires that the supply be uniquely identifiable.
Currency and conversion
If the invoice is issued in a foreign currency (EUR, USD), indicate the exchange rate used to calculate Swiss VAT. The FTA accepts the monthly average rate or the rate on the day of supply.
Digital retention
Digital invoices must be retained for 10 years in a readable and immutable format (art. 958f CO). For SaaS sales with recurring billing, each invoice must be individually archived with a unique sequential number.
Tip: AccountEX automatically generates LTVA-compliant invoices for digital sales, with automatic calculation of the correct rate, reverse charge notation for foreign B2B sales, and compliant digital archiving for 10 years.
Practical tips for digital VAT compliance
- Configure your billing system to automatically distinguish between B2B sales (reverse charge) and B2C sales (customer's country VAT) — the most common mistake is applying the wrong rate to the wrong customer type
- If you sell SaaS to private EU customers, consider the Non-Union OSS regime: a single registration in one member state covers all 27 EU countries, avoiding multiple registrations
- Always collect at least two pieces of evidence of the recipient's location (IP address, card country, billing address) — in the event of an FTA audit or EU review, documentation is critical
- Monitor the CHF 100,000 worldwide turnover threshold: if your startup is growing, you may exceed it and need to register your foreign entity in Switzerland sooner than expected
- For mixed bundles (software + hardware, SaaS + consultancy), always separate the components on the invoice: each element follows its own VAT rules for place of supply and rate
- Automate VAT calculation for cross-border sales with software that updates EU rates in real time — rates change frequently and manual error is highly likely
- Use AccountEX to manage VAT invoicing for digital sales: automatic rate calculation, reverse charge notation, multi-currency and compliant archiving — all integrated into your Swiss accounting workflow
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