Changes from January 1, 2025

On June 16, 2023, the Swiss parliament adopted a partial revision of the Swiss VAT Act. Liechtenstein has adopted the amended provisions into its national law based on the VAT treaty between Switzerland and Liechtenstein and these will enter into force on January 1, 2025.

The amendments cover the following key topics:

Digitalization and internationalization

According to the partially revised VAT Act, online mail order platforms will be considered suppliers of services for sales processed via their platform from 2025 and will therefore be subject to VAT.

Services that are not provided directly to persons physically present on site, such as online training courses, will now be taxed at the recipient's location.

Net tax rate method

The most important changes

You can choose more than two net tax rates. The 10% rule remains applicable, i.e. a new net tax rate must be applied if the turnover share of the respective activity is more than 10% of the total taxable turnover.

When switching from the effective accounting method to the net tax rate method, you must make corrections: On the current value of the goods and services at the time of the change, you must refund to the Fiscal Authority the input tax previously deducted, including its portion corrected as contribution tax.

When changing from the net tax rate method to the effective accounting method, you must make corrections: You can claim the tax charged on the current value of the goods and services at the time of the change.

Individual balance and lump-sum tax rates have been reviewed and redefined.

Special procedures for export deliveries (form 1050), crediting of notional input tax (form 1055) and margin taxation (form 1056) have been abolished.

Activities that require an additional net tax rate must be applied for via the eMWST portal.

Check the impact on your company

You will find all changes as of January 1, 2025 under the following link:

Changes to net tax rates as of January 1, 2025 (PDF, 1 MB, 25.11.2024)

Your previously approved net tax rates will be automatically adjusted and displayed in your statements. You do not have to do anything.

If your company carries out services for which an additional net tax rate must be approved, apply for this via the eMWST portal. Also ensure that the different activities and services are recorded separately in the accounts, broken down according to the respective net tax rate.

Special: elimination of mixed sectors and 50% rule

Industries in which several activities are usually carried out, which would have to be accounted for at different SSS rates if considered individually, were previously able to account for the ancillary activities listed at the approved net tax rate, provided that the turnover from ancillary activities did not exceed 50% of the total taxable turnover.

Now, each activity that accounts for more than 10% of total taxable turnover must be charged at the respective net tax rate.

Example:

A sports store is a typical mixed sector. In addition to trading in sports equipment and clothing (SSS 2.1%), sports equipment is also rented out (SSS 3.0%) and ski and snowboard servicing (SSS 5.3%) is carried out.

Previously, all turnover could be accounted for at 2.1%, provided that the turnover from ancillary activities did not exceed 50% of the total taxable turnover.

Now, the net tax rate is applied for a relevant service if the share of these services amounts to more than 10% of the total taxable turnover. More than two net tax rates are possible.

New tax exemption for travel agencies

The net tax rate for "travel agency: pure retailer" no longer applies. The services are now exempt from VAT and must be declared in item 230 of the VAT statement. The option (voluntary taxation) is not possible with the net tax rate method.

If you do not make any other taxable supplies, check the deletion from the VAT register.

Would you like to change the accounting method as of January 1, 2025?

Report this via the eMWST portal by February 28, 2025:

When changing from the net tax rate method to the effective accounting method, input tax not previously deducted can be claimed on the current value in the first VAT return after the changeover to the effective accounting method in item 410 of the VAT return.

When switching from the effective method to the net tax rate method, corrections are now required. The input tax on the current value of the goods and services must be debited. This is done in the last VAT return before the changeover via item 415 of the VAT return.

Simplifications

Value Added Tax Division can currently be settled on a quarterly, half-yearly or monthly basis. SMEs can now also voluntarily invoice Value Added Tax Division annually, thereby making the invoicing process more efficient. Annual billing is linked to the obligation to pay in installments. The installments are set by the Fiscal Authority, usually based on the tax claim from the last tax period.

If a municipality expressly designates the funds it pays to the Reception as a subsidy or other contribution under public law, these funds are deemed to be a subsidy or other contribution under public law.

Tax reductions

The reduced tax rate now applies to monthly hygiene products.

The following are now exempt from Value Added Tax Division

• travel services resold by travel agencies and their associated services (foreign travel agencies are therefore not taxable in Liechtenstein if they organize trips in Liechtenstein);
• active participation in cultural events;
• the provision of coordinated care for medical treatment;
• the provision of infrastructure to attending physicians in outpatient clinics and day clinics;
• the care and housekeeping services of private Spitex;
• the provision of personnel by all non-profit organizations;

Combating fraud

As a measure against serial bankruptcies, the Fiscal Authority is authorized to demand securities from members of the managing bodies of legal entities if they are members of the managing body of at least two other legal entities that have gone bankrupt within a short period of time.

The transfer of emission rights is susceptible to fraud in the area of Value Added Tax Division. Therefore, the transfer of emission rights, certificates and attestations for emission reductions, guarantees of origin for electricity and similar rights are now subject to supply tax, even if the purchase is made from a company domiciled in Switzerland.