Customs and Taxes when Shipping to Switzerland

The increasing trend towards cross-border online trade provides many opportunities for businesses to access new consumer markets from around the globe. The Swiss market has become particularly attractive for online shops based in the EU. It is essential for these businesses to understand the customs and tax obligations when shipping their goods to Switzerland. In this article, we provide key insights into Switzerland’s customs and tax laws, including customs clearance procedures, VAT regulations, exemptions, and issues surrounding VAT registration in Switzerland.

The rise in shipments from Germany and the rest of the EU to Switzerland

In recent years, there has been a significant increase in the volume of shipments from Germany and other EU countries into Switzerland. This is due to several factors, including the strength of the Swiss economy, the high purchasing power of Swiss consumers, the appealing tax rates in Switzerland compared to most EU countries, and an overall increase in cross-border trade due to the rise in online shopping and mail-order. For companies shipping goods to Switzerland, it is important to understand the customs and tax implications to ensure compliant and cost-efficient delivery of products.

Switzerland’s favourable tax and customs rates

Switzerland is not a member of the European Union but is closely linked to the EU economically through several bilateral agreements, including the free movement of people, goods, and services. This means that while Switzerland has its own distinct customs laws and import taxes, trade with the EU is highly simplified.

Switzerland also has lower rates of customs duties and sales tax compared to most EU countries. The standard VAT rate in Switzerland is just 7.7% compared to an average of over 20% in the EU. Corporate tax rates and personal income tax rates are also competitive in Switzerland. These factors make Switzerland an attractive market for companies selling goods from Germany and the EU. The lower sales tax rates allow companies to charge a lower final price to the end consumer which leads to increased sales and profitability.

What is the difference between customs and import tax?

Customs duties and import taxes are often confused but refer to two separate costs. Customs duties are fees levied by the customs authority on goods imported into a country. One aim is to protect domestic industries by placing a premium on foreign goods in the form of the customs duty. Import taxes, on the other hand, refer to domestic taxes applied to foreign goods, such as value added tax (VAT) and excise duties. In Switzerland, both customs duties and import taxes are charged on shipments entering the country, subject to certain conditions and exemptions in some cases.

The exact laws governing customs duties and import tax rates, including exemptions and deductions, are quite complex and constantly evolving. In the following sections we will try to provide an accurate depiction of the most up-to-date rules which apply in both these areas.

Customs Clearance in Switzerland

Goods crossing the border between the EU and Switzerland must go through customs procedures and clearance. This process involves presenting the necessary documentation to customs authorities, and paying any applicable customs duties and import tax.

In some cases, customs inspections may be conducted to verify the accuracy of the information provided and ensure compliance with customs regulations.

Who pays the customs duty?

When shipping goods from the EU to Switzerland, in principle the buyer is responsible for paying the customs clearance fees which includes applicable taxes and duties. However, in practice, the responsibility of paying the customs clearance fees can be undertaken by the buyer, seller, or even the specific shipping service provider, depending on the sales agreement. Often, the seller may agree to cover the customs clearance fees as part of the sales price, or charge for it as an additional service.

How much are customs duties when shipping to Switzerland?

Swiss customs duties are calculated based on the type of good, its value, and the weight and size of the package. The exact fee can vary significantly, but to give a general indication based on Swiss Post’s rates for customs clearance when delivering goods from the EU to Switzerland:

• They charge a minimum of CHF 11.50 and a maximum of CHF 70 for customs clearance when delivering goods from the EU to Switzerland.
• The basic customs clearance fee is CHF 11.50 when the country of origin is Germany, France, Italy, or Austria. It is CHF 16 for all other countries.
• An additional fee of 3% of the value of the goods is added, up to the maximum total of CHF 70.
• Additional fees may be added if they are required to do extra work, such as complete value assessments in the case that the information provided by the sender is inadequate.

The above provides a general indication of Swiss customs clearance fees based on the typical charges of a reputable shipping service provider like Swiss Post. In practice, this fee may be added to the price of the goods by the seller and indicated on the invoice as delivery and tariffs.

The EU and Switzerland both use the Harmonised System (HS) for classifying goods, which makes it easier to consistently identify the types of goods being imported into Switzerland from the EU.

Import sales tax: when does it apply and how much is it?

In addition to customs duties, commercial goods imported into Switzerland are subject to import sales tax, which is a form of value added tax (VAT). The standard import VAT rate is 7.7% of the taxable value of the shipment. Switzerland also has reduced VAT rates of 2.5% for essential items such as some foodstuffs, books, newspapers, medicines, etc., and a special rate of 3.7% for hotel accommodation and related services. These rates are scheduled to increase to 8.1%, 2.6%, and 3.8% respectively from 1st January 2024.

In principle, all goods which are imported to Switzerland are subject to import sales tax / VAT in Switzerland. However, there are exceptions in certain situations. Previous tax laws on parcel shipments to Switzerland meant that import sales tax was always waived for small consignments with a tax value of 5 Swiss francs or less. In other words, a package of goods taxed at the standard VAT rate of 7.7% was only subject to import tax in Switzerland if its value was CHF 65 or more, and a package of goods taxed at the reduced rate of 2.5% was only subject to import sales tax if its value was CHF 200 or more. Consignments with a value exceeding these thresholds is always subject to import sales tax in Switzerland.

New VAT regulations on mail-order to Switzerland

In January 2019, new regulations came into force in Switzerland regarding import sales tax on mail-order deliveries. Under the revised laws, small consignments below the previously discussed limits are still typically exempt from import sales tax.

However, if a company delivers more than a total of CHF 100,000 worth of small consignments in a calendar year, they are required to register for Swiss VAT and charge VAT on all their sales in Switzerland.  This then includes both small consignments and large consignments, whereby VAT should be clearly charged and shown on the invoice, and the VAT collected must be handed over to the Swiss tax authorities.

If a company does not exceed the threshold of CHF 100,000 in small consignments, they do not have to register for VAT in Switzerland and their small consignments remain exempt from import sales tax. That said, larger consignments above the threshold values of CHF 65 or CHF 200 (depending on the VAT rate applied) are still always subject to import sales tax. The difference is that the seller does not need to specifically add the VAT to their invoice and are therefore not directly liable for VAT in Switzerland. Instead, the import tax is charged directly to the customer.

The process is as follows: the supplier sends a large consignment to Switzerland; the forwarder/importer must then pay the sales import tax at customs. Therefore, the tax authorities receive the VAT at this stage. Upon delivery to the end customer, the forwarder claims this amount back from the customer plus a processing fee. The end result is that:

• The supplier does not need to consider any VAT obligation in Switzerland.
• The forwarder of the consignment must handle the processing of VAT, yet in the end the transaction is VAT neutral for them.
• The end customer takes on the VAT liability, which would be built into the final price they pay for the goods to the forwarder/importer.

Other exemptions

In addition to the exemptions given to small consignments, the following are also exempt from import VAT in Switzerland:

• Sample products: Commercial samples used for obtaining orders are import VAT exempt.
• Transit goods: Goods that are transported through Switzerland but are not cleared for free circulation in the country.
• Returned goods: Goods that were originally exported from Switzerland and are re-imported unchanged.

Voluntary registration for Swiss VAT: when does it make sense?

Non-Swiss companies that make frequent taxable shipments to Switzerland may benefit from registering for Swiss VAT on a voluntary basis. Voluntary VAT registration means a company can charge Swiss VAT on all its sales to Swiss customers and recover input VAT on costs. This may result in a lower tax burden compared to paying VAT in the country where the company is based, especially considering that Switzerland has a more tax-friendly environment than most EU nations.

Overall, voluntary VAT registration may simplify shipping goods to Switzerland and can reduce costs for high-volume importers. However, it also means complying properly with Swiss tax law which can be complex. To register for Swiss VAT, foreign companies have to appoint a local fiscal representative in Switzerland.

Special considerations

Excise goods

Higher customs duties and additional taxes apply to “excise goods”, which includes items such as alcoholic beverages, tobacco products, and mineral oils. Anyone planning to ship excise goods to Swiss customers should obtain the latest information on the taxes and duties they will have to pay, as it can be significantly higher than ordinary shipments.

Watches, Jewellery and Precious Metal

Suppliers and customers alike should both be cautious when it comes to shipping watches, jewellery, or other objects made from precious metals into Switzerland. Swiss customs operate on a “zero tolerance” policy on counterfeit jewellery and watches and takes it as their responsibility to scrutinise any such parcels entering Switzerland. If the purity is found to be inferior to the quality indicated on the shipment, or if the goods are found to be fake, they will be confiscated at customs, even if the customer has already paid for them.

Gifts

Gifts sent to Switzerland by private individuals are exempt from customs duties if the following conditions are met:

• Both the sender and the recipient in Switzerland are private individuals.
• The value of the package is less the CHF 100, excluding shipping costs.
• The item is declared to be a gift.
• The package does not contain excise goods such as alcohol or tobacco.

Is it necessary to have a fiscal representative in Switzerland?

For companies shipping goods to Switzerland who do not exceed the threshold for mandatory VAT registration in Switzerland, a Swiss fiscal representative is not legally required. However, a fiscal representative can provide valuable assistance in navigating Swiss import regulations and ensuring tax compliance. A fiscal representative can:

• Act as the point of contact for Swiss customs and tax authorities.
• Help streamline the customs clearance process.
• Ensure correct calculation and payment of duties and taxes.
• Assist with VAT registration and VAT returns and queries if you opt to voluntarily register for Swiss VAT.
• Help you stay up to date with changes in Swiss laws on imports and taxes.

Companies who exceed the delivery threshold for small consignments, and are therefore obligated to register for VAT in Switzerland, must also enlist the services of a local fiscal representative in Switzerland to help facilitate this process and ensure that they remain legally compliant with Swiss tax.