Australia, as well as many other jurisdictions including New Zealand and Switzerland, are implementing new rules regarding the application of the goods and services tax (GST) or value added tax (VAT) to the supply of low value goods to consumers.
The Swiss Federal Council has published its commentary to the partial revision of the VAT Law. If the draft legislation is approved by the Swiss parliament, the changes will come into effect on 1.1.2016. Among other changes we set out below those which are most relevant for ebiz & e-commerce.
This publication prepared by PwC US takes the US view on the VAT treatment of eservices supplied through the Cloud (electronically) in Europe and takes a look at the global trends in the VAT treatment of cross-border eservices delivered via the cloud.
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As discussed before, France and Luxemburg decided to apply the reduced VAT rate to ebooks, most likely also to attract publishing companies to their countries. As this treatment does not comply with the applicable EU rules, the EU Commission initiated the appropriate action against these two countries.
As Switzerland is not part of the EU, EU VAT rate restrictions do not apply. According to the Swiss Parliament’s website the “Bundesrat” is requested to consider the application of the reduced VAT rate to ebooks, as part of the ongoing review of the VAT legislation.
It appears that Swiss legislators would like to remove the distinction in VAT treatment which exists between paper books and ebooks.
If you are involved in publishing or distributing ebooks, you should also monitor the Swiss ebooks and eservice developments. As you might be already aware you are required to register for VAT in Switzerland if your B2C sales to Swiss residents exceed CHF 100’000 in a single calendar year.
PwC surveyed 7,005 consumers worldwide, including 1,000 respondents from Switzerland. The single biggest conclusion that we drew from our study is that consumers are outpacing traditional retailers and online pure-players are closing the gap. Consumers choose the channel that best suits their needs, doing their research predominantly online for products before buying the product in a store. Besides company websites, more and more consumers are researching and following brands via social media.
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