If you are concerned with this, you may want to investigate if basing your company in Switzerland offers more advantage than in EU : its at the center of Europe but doesn't belong to EU.
If a company does not sell to EU citizens, then yes, being based outside in the EU will let you avoid these rules. But if your goal is to sell to EU consumers, basing the company in Switzerland as your European base doesn't help, because for non-EU sellers (and from 1 January, for all sellers), VAT is charged based on the location of the customer; the location of the company is irrelevant. And Switzerland will generally enforce tax judgments of EU member states, so if you violate German law in your dealings with German citizens, being based in Switzerland isn't going to shelter you. If you sell services to a German, you'll be required to charge German VAT rates, regardless of whether the company is based in Germany or Switzerland.
Some larger Swiss-based companies were actually in favor of this change, because in some cases they have been at a VAT disadvantage relative to some EU-based companies, who were previously allowed to charge "source country" rates rather than "destination country" rates for digital services. Therefore Swiss providers selling to Germans were at a disadvantage to Luxembourg-based providers selling to Germans, because the Swiss provider had to charge German VAT, while the Luxembourg provider could charge the lower Luxembourg VAT. With the new "destination location" rules being applied across the board, including to EU-based companies, Luxembourg will lose its advantage vis-a-vis Switzerland there.
I run a small software development shop, registered in Switzerland. We sell installable software in productized form. We also employ a local accounting firm to handle our accounting and advise on taxation matters. At the moment the state of affairs is such that we do NOT need to charge or to report VAT on any sales unless it's a sale to a Swiss customer. I had them double-check this and I also got a second opinion from another company. Not Swiss = No VAT, period. So, this -
a Swiss supplier must charge the VAT rate of the EU
Member State where EU consumers are domiciled or the
services are used and enjoyed
doesn't correlate with reality on my end. I can only guess that the discrepancy is due to this being specific to -
Telecommunications and broadcasting companies, as
well as providers of electronic services to consumers
> Switzerland signed up to the EU’s customs union in 1972, which abolished subsidy and tariff barriers. Since then, it has also decided to sign up to the majority of the single market: it is a full member of the single market for goods, a signatory to the Schengen agreement, and it has signed up to most of the single market for capital. In many areas, therefore, Switzerland is effectively a member of the single market. But like Norway, it does not have the ability to affect the rules that govern it. [1]
Just because the Swiss are not in the EEA doesn't mean they aren't force to adopt EU policy. Their exports depend on it.
Same as Norway, indeed. But Norway has implemented just 5,000 pieces of EU legislation in the last 22 years, whereas the UK has, on average, implemented 3,000 pieces per year. [I'm sticking to Norway, because it is the region that I have facts and figures for - I don't know the figures for Switzerland.]
The claim the Norway and Switzerland are governed remotely by the EU is therefore not true - either that, or the Norwegian law somehow pre-empts EU law, and thus complies with it before it is passed? (Which makes it sound like Norway governs the EU, and not the other way around :p).
I'm not claiming that Norway is de-coupled from the EU, just that the claim that it is governed remotely by a body in which it has no say is false.
Some larger Swiss-based companies were actually in favor of this change, because in some cases they have been at a VAT disadvantage relative to some EU-based companies, who were previously allowed to charge "source country" rates rather than "destination country" rates for digital services. Therefore Swiss providers selling to Germans were at a disadvantage to Luxembourg-based providers selling to Germans, because the Swiss provider had to charge German VAT, while the Luxembourg provider could charge the lower Luxembourg VAT. With the new "destination location" rules being applied across the board, including to EU-based companies, Luxembourg will lose its advantage vis-a-vis Switzerland there.
See: http://www.kpmg.com/global/en/issuesandinsights/articlespubl...