In 2024, Switzerland imported goods from Germany to a value of nearly $68 billion USD, making Germany Switzerland’s biggest trading partner for imported goods. Despite the geographical proximity, German businesses have to be careful when conducting business with Swiss customers. Since Switzerland is not a member of the EU and uses the Swiss franc instead of the euro, there are important differences when it comes to invoicing.

This article provides an overview of the basics of invoicing and applying value-added tax (VAT) in Switzerland. Learn what information is required on an invoice issued to Swiss customers, when to apply the reverse charge procedure, and under what circumstances a German company becomes liable for VAT in Switzerland. We’ll also explain what needs to be considered when converting currencies and what common errors and audit risks arise when invoicing Switzerland.

What’s in this article?

• The basics of invoicing and VAT in Switzerland
  
• What information is required on an invoice to Switzerland?
  
• When is a German company liable for VAT in Switzerland?
  
• What do German companies need to consider when converting currencies?
  
• Potential errors and audit risks when invoicing Switzerland
  

The basics of invoicing and VAT in Switzerland

Switzerland is not part of the Community and is therefore defined as a third country according to Section 1, Paragraph 2a of the UStG (German VAT Act). There are no unified VAT rules for third countries, with each state subject to individual regulations. German companies doing business in third countries have to differentiate between B2C and B2B transactions, as well as between the sale of goods and services.

Invoicing individual customers in Switzerland

When a German company sells goods to an individual customer in Switzerland, it generally has to show German VAT on the invoice. The same goes for services rendered for individual customers in Switzerland. The invoice can be issued in either euros or Swiss francs.

Invoicing businesses in Switzerland

According to Section 4, No. 1a of the UStG and Section 6 of the UStG, deliveries of goods by German companies to companies in third countries are considered tax-exempt export deliveries. Consequently, German companies are not required to show VAT on invoices for deliveries to Switzerland. However, this is subject to the condition that the goods physically arrive in Switzerland and that this is documented by export papers or written confirmation from customs. Once in Switzerland, the goods are subject to Swiss customs and tax regulations.

When services are performed for a Swiss company, the tax liability is usually reversed (reverse charge procedure), provided the place of performance under the applicable rules is in Switzerland. The place of performance is not in Germany, therefore the service is not subject to German VAT, but rather to VAT in the country where the receiving company is based. This means you don’t have to show VAT on the invoice. You do, however, have to include a clear reference to the reverse charge procedure in order to signal to the Swiss company that it will have to remit VAT itself.

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What information is required on an invoice to Switzerland?

This is the mandatory information you must include on an invoice issued to Switzerland in order to comply with legal requirements:

• Full name and address of seller
  
• VAT identification number of seller (if registered for VAT in Switzerland)
  
• Full name and address of buyer
  
• Issue date of invoice
  
• Date of delivery or service, unless this is identical to the invoice date
  
• Precise description of the type, subject matter, and scope of the delivery or service
  
• Invoice total for the delivery or service
  
• Applicable tax rate and tax due on the invoice, or a note on export exemption or application of the reverse charge procedure
  

When is a German company liable for VAT in Switzerland?

Since 2018, both Swiss and foreign companies providing services in Switzerland are subject to VAT if their worldwide annual turnover exceeds 100,000 Swiss francs (CHF). This includes German businesses that exceed this revenue threshold. As soon as the threshold is exceeded, you’re obligated to register with the Swiss VAT register.

Once registered, your company will be recognized as liable for VAT in Switzerland and will have to charge VAT on goods and services. A key part of the registration process is getting your unique business identification number (UID). This number is used not only to identify the company, but also to verify its tax obligations. Once your company is registered in the Swiss VAT register, it will receive a UID with the suffix “MWST.” The Swiss UID register lists both those companies that are registered in the national commercial register and those that are only registered with the VAT register. Non-Swiss companies commonly fall under the latter.

What do German companies need to consider when converting currencies?

In addition to VAT regulations, German companies issuing invoices to Switzerland must also consider the conversion between euros and Swiss francs, factoring in both tax and administrative implications.

Currency conversion

First, you need to decide which currency you want to use for the invoice. It’s best to discuss this with your customers to find out which currency they prefer. Once you’ve agreed on a currency, you can use it to provide your quote, either in euros or Swiss francs.

If your customer wants a quote or invoice in Swiss francs, you’ll have to convert your euro price. Generally speaking, you should use the exchange rate at the time you issue the quote or invoice. Possible sources for this exchange rate include, for example, the European Central Bank's reference exchange rate or the exchange rates of banks and other financial institutions. Document the exchange rate at the time of conversion so you can answer any questions in the event of rate fluctuations.

Dealing with exchange rate gains and losses

If payments are received in a currency other than the invoice currency, exchange rate gains or losses can arise. These gains and losses must be recorded correctly on your books.

Let’s say you invoice one of your Swiss clients €1,000, and the exchange rate at the time of invoicing is EUR 1 = CHF 1.10. This would mean your client has to pay you 1,100 Swiss francs. If payment is made one week after receipt of the invoice, the exchange rate might have changed to, say, EUR 1 = CHF 1.12. This would mean you would receive a payment of 1,120 Swiss francs. Under tax law, this exchange rate gain of 20 Swiss francs must be recorded on your profit and loss (P&L) statement.

Potential errors and audit risks when invoicing Switzerland

When invoicing Switzerland, you should take particular care to avoid errors and prevent potential audit risks. Below are some key points to bear in mind.

Failure to register with the VAT register

If you’re liable for VAT in Switzerland, you have to register with the national VAT register. This is the only way to get a business identification number, which must be included on your invoices. If this number is missing, it can lead to inquiries or delays in the tax authorities' acceptance of your invoices.

Incomplete invoices

Your invoices must contain all the information required by law. Invoices that don’t contain the mandatory information generally won’t be accepted. Incomplete invoices often lead to additional time and money spent communicating with the customer, as well as to payment delays. They can also result in tax problems.

Currency conversion errors

Make sure you convert euros to Swiss francs, and vice versa, correctly. Making errors during conversion or failing to document the exchange rate can lead to discrepancies with customers and cause problems with taxes. You must also record exchange rate gains and losses accurately in your accounts.

VAT errors

A common mistake when invoicing Switzerland is applying VAT incorrectly. You need to clearly specify whether you’re invoicing goods or services to an individual consumer or a business in Switzerland. In some cases, you’re required to charge German VAT. In other cases, such as when you’re using the reverse charge procedure, you don’t need to show VAT.

No reference to reverse charge procedure

If you’re applying the reverse charge procedure to invoices issued to Switzerland, you must indicate this clearly on your invoices. Add a written notice, such as “Reverse charge applied” or “Any tax due is the responsibility of the recipient.” If this information is missing or unclear, the Swiss tax authorities might decide that it’s your company rather than your Swiss customer that’s liable for VAT. This can lead to back taxes and additional audits.

Missing export documentation

To benefit from the export exemption, you must provide export documents or written confirmation from customs. If these documents are missing or incorrectly completed, tax problems and penalties could result, as the tax authorities will not recognize the export as tax-exempt.