Digital services

Digital services: IN BRIEF

A service is considered to be a digital service if the following cumulative conditions are fulfilled:

• It is provided via the internet or another digital network.
• It is provided automatically, i.e. human involvement on the part of the service provider is minimal.
• The service cannot be provided without information technology.

The following are not considered to be digital services:

• Mere communication between persons by wire, radio, optical or other electromagnetic media.
• Interactive educational services pursuant to Article 21(2)(11) VAT Act

The distinction between digital services and consultancy services subject to reverse charge is not always easy to make.

We would be happy to answer your questions and analyse your situation.

What are the tax liabilities if the company is located abroad?

A company that has its registered office abroad and which provides telecommunications or digital services in Switzerland to non-taxable recipients becomes subject to taxation in Switzerland if the company generates revenue of at least CHF 100,000 within one year arising from services rendered in Switzerland and abroad that are not exempt from tax.

Below this threshold, the company is exempt from taxation, but may waive this exemption.

If the supplier based abroad is subject taxation, they must pay tax at the appropriate rate on all taxable deliveries made within the country. This also includes telecommunications and digital services provided to taxable persons.