- Swiss VAT law was revised on 1 January 2025, affecting VAT-exempt supplies, VAT rates, and subsidies.
- Subsidies impact the VAT position of recipients and raise questions under Pillar Two global minimum tax rules.
- Article 18(2)(a) of the VAT law defines subsidies as cash flows not considered remuneration for services.
- Subsidies are provided by public entities without market-based consideration to promote tasks or alleviate financial burdens.
- Article 18(3) states that funds designated as subsidies by public entities are considered as such, but does not list examples.
- The Swiss Federal Tax Authority must respect explicit subsidy designations unless arbitrary or abusive.
- Subsidies are not subject to VAT but may lead to a reduction of input VAT for recipients.
- Input VAT reduction methods depend on whether expenses are directly attributable to the subsidized activity.
Source: taxathand.com
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.
