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Customs compliance

Foreign companies and customs compliance

When it comes to Swiss customs compliance, a foreign company cannot prima vista assume that it is treated at equal footing with a Swiss based company. Various parameters of the customs compliance process force a foreign company to map its transactions that involve Switzerland. In particular it will have to be determined what is needed for balancing border compliance and the commercial conditions underlying the transactions.

VAT plus assists foreign companies to define and implement a compliance strategy for purpose of Swiss customs. Instead of producing reports our focus is on enabling foreign companies to handle their daily transactions efficiently and to provide them with the corresponding information and tools.

 

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Compliance issues

Foreign companies that are involved in import/export transactions that touch Switzerland will have a keen interest in a swift and efficient handling of the customs formalities. In that scope, among the issues VAT plus assists foreign companies with are:

  • origin of goods,
  • value to declare for customs purposes,
  • information to be mentioned in a customs declaration,
  • instructions to be communicated to a customs forwarder,
  • adjustment of a customs declaration,
  • Centralised settlement procedure (CSP),
  • deferral of VAT at import,
  • temporary import,
  • chain transactions.

VAT plus’ clients include a wide variety of foreign companies that on a regular basis import goods to and/or export goods from Switzerland.

 

 

 

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Postponed payment

Swiss customs offers Swiss VAT registered companies the possibility to sign up for the Centralised Settlement Procedure (CSP).
This procedure allows for postponing the payment of VAT at import till up to 60 days. In order to entitle for the CSP procedure a security will have to be posted on behalf of the Swiss customs authorities. The height of the security is determined by the import value during a specific reference period.
The ZAZ procedure is interesting for foreign companies/Swiss VAT registered that import regularly, even when only in the scope of a project (e.g. installation supplies). The CSP facility makes a foreign company more independent of the customs forwarder.

Customs valuation

The value to be reported is one of the decisive parameters for customs purposes or VAT at import/export.
For example, a foreign company (not Swiss VAT registered) that makes an installation supply in Switzerland will have to report a different value at import than a foreign company that is VAT registered in Switzerland would have to report.
Chain transactions may need specific attention when it comes to the customs value.
As the taxable base for VAT at import also includes the customs duties, foreign companies should consider whether it is worthwile to include proof of origin in the documentation and to claim preferential (customs) tariff treatment where applicable.

Deferral of import VAT

A foreign company that in connection with imports/exports has annually a tax credit of more than CHF 50’000 can apply for the facility of deferral of VAT at import.
VAT deferral at import means that instead levying the VAT at import actually at the border by the customs authorities, the import VAT is self-declared in the quarterly VAT return. To the extent the company is entitled to recovery of input VAT, that self-declared VAT at import is in the same VAT return deducted as input VAT. Consequently, in those cases the facility of VAT deferral has the advantage that VAT at import has no longer be prefinanced.
The facility of deferral of VAT at import is ideal for foreign companies that use Switzerland as base for their European distribution center.

Customs controlling

Common to companies that are involved in customs compliance is to consider import or export transactions  over and done with from the moment the goods have been released by the customs authorities.
However, from an indirect tax perspective such an approach is not sufficient. Customs documents  issued on import or export need to be verified. For example, often it happens that the importer is not correctly mentioned. Furthermore, the import/export documents can contain instructions from the customs authorities to disclose certain information within a specific period before the final documents are released.
Import or export documents are securities, and consequently must be handled as such, i.e. with care.