- Draft VAT practice update clarifies when a payment qualifies as a subsidy: it must be made by a public authority, involve no specific consideration for the payer, and generally be granted on a legal basis.
- It confirms that funds forwarded by private-law or public-law institutions, foundations, or bodies acting on behalf of public authorities are treated as subsidies under Art. 30 VAT Ordinance.
- Such forwarded subsidy treatment is meant to cover cases where institutions like the Swiss National Science Foundation disburse funds on behalf of government bodies.
- The draft also states that if a public authority explicitly labels funds paid to a recipient as a subsidy or other public-law contribution, those funds are deemed subsidies/other public-law contributions for VAT purposes under Art. 18(2)(a) and 18(3) VAT Act.
Source: estv.admin.ch
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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