Swiss and Liechtenstein architectural services are in high demand across borders. And Switzerland and Liechtenstein are also an interesting market for German architects. You can read here what must be taken into account in terms of VAT.
The Swiss and Liechtenstein construction industries, which generate a not insignificant share of gross value added at over 4% and 5% respectively, are not only of great importance for art, culture and society, but also economically. Switzerland and Liechtenstein have numerous architecturally valuable private and especially public buildings. Liechtenstein also focuses on promotion and (university) education (with 2 of a total of 6 courses offered by the University of Liechtenstein) in architecture.
In light of this, it is not surprising that, on the one hand, Swiss and Liechtenstein architectural services are also in demand across borders, and on the other hand, Liechtenstein and Switzerland also represent a market that is not uninteresting to foreign and often German architects, especially in connection with projects awarded in connection with international tenders.
Cross-border service relationship between Germany and Switzerland or Liechtenstein always requires one due to the lack of cross-border harmonized VAT legislation Assessment from a German as well as from a Liechtenstein or Swiss perspective.
Due to international agreements, the Principality of Liechtenstein and Switzerland not only have largely identical VAT rules, but also form a common customs area and domestic VAT. The following scenarios therefore also apply to the relationship between Liechtenstein and Germany.
Architectural services: real estate services
According to Swiss law, services related to real estate are:
- Brokerage, management, appraisal and valuation of the property,
- services in connection with the acquisition or creation of real rights to the property,
- services in connection with the preparation or coordination of construction works such as architectural, engineering and construction supervision services,
- Monitoring of land and buildings and accommodation services.
From a German point of view, the following services in particular are related to a property:
- Other services of the type specified in § 4 no. 12 UStG (including rental and leasing)
- other services in connection with the sale or acquisition of land,
- other services serving the development of land or the preparation, coordination or execution of construction works.
Architectural services, like services performed by construction and surveying engineers, belong to the other services that serve for the development of land or the preparation, coordination or execution of construction works (3a.3, subsection 8 UStAE). The condition is that the service is delivered in close connection with an explicitly stated property, that is to say that, for example in the case of engineering or planning services, the location of the property is already known at the time the service is provided.
Architectural services from Switzerland to Germany: B2B relationship
According to Swiss law
The service is taxable in Switzerland if the place of service is in Switzerland. For services, the place of performance is generally determined according to the country of destination principle (Article 8, subsection 1, VAT Act). For services in connection with a property, the place of performance is determined by the location of the property to which the service provided is connected, deviating from the principle. If the service is in connection with a property located in Germany, the place of service is in Germany. The service is considered an export of services in Switzerland and is not taxable.
From the perspective of the German service recipient, the Swiss service provider in Germany also provides another service in Germany against payment and within the scope of its business (§ 1(1) no. 1 UStG), since from a German perspective another service in accordance with § 3, subsection 9 UStG, for which contrary to the principle (§ 3a, subsection 2 UStG), the place of performance according to § 3a, subsection 3, no. 1 UStG is also determined by the location of the property with which the service is related.
If the requirements for tax liability in Germany are met, a Registration with the responsible tax office (For Swiss and Liechtenstein entrepreneurs: Constance Tax Office) mandatory. Foreign companies (§ 13b Abs. 7 UStG) must be registered in Germany, if they generate sales whose place of performance is in Germany and where the tax liability does not pass to the recipient of the service.
There is therefore no obligation to register if this is the case Reverse payment obligation according to Section 13b UStG present. The requirements according to § 13b Abs. 2, Abs. 5 UStG is fulfilled if the place of fulfillment according to § 3a Abs. 3 UStG is in Germany, and it is a service provider based abroad (EU country or third country) and the factual requirements according to § 13b Abs. 1 UStG is not fulfilled at the same time. It should be noted that there is also a reversal of the tax liability (to the German recipient of the benefit) if the recipient receives the benefit for the non-commercial area (e.g. for the private house) (§ 13b, subsection 5, point 7 UStG).
As a result, the tax liability changes from the Swiss service provider to the German service recipient. The invoice must be issued net by the Swiss service provider and ideally contain the note “Tax liability for service recipient”. At the same time, the German beneficiary is entitled to input VAT deduction.
Architectural services from Switzerland to Germany: B2C relationship
According to Swiss law
From the perspective of a Swiss service provider, there is no difference in the B2B constellation. The place of fulfillment is also in the B2C relationship according to § 8 subsection 2 easy. f) The VAT Act according to the location principle of the property (Germany). The second benefit is therefore not taxable in Switzerland.
From a German perspective, as in the B2B case, there is another service for a fee that is provided within the framework of a business. The place of fulfillment is also determined for B2C cases according to § 3a subsection 3 no. 1 UStG, according to which the place of fulfillment is at the location of the property (Germany).
The Swiss service provider is required to register for VAT in Germany and issue a gross invoice showing German VAT (approx. 19%). A transfer of the tax liability to the German beneficiary according to Section 13b UStG is generally excluded in the B2C relationship. Benefits to an entrepreneur for his non-entrepreneurial area are excluded. that VAT registration must be carried out for Swiss entrepreneurs at the Konstanz tax office.
Procedural alternative to EU multiple registration
If the Swiss service provider also provides similar services to non-business recipients in one or more other EU member states and is required to register there, it can use the one-stop-shop procedure (non-EU/NON-EU scheme) in accordance with § 18i VAT, which means that he can collect his registration and the associated obligations in one EU member state for all EU member states. This avoids multiple registrations in different EU member states.
For example, if planning services are provided to non-entrepreneurs in Germany, France and Spain, the registration obligation that then arises in each of the 3 states can be avoided by the entrepreneur providing the service choosing an EU member state through which he can all EU B2C sales (here: Germany, France and Spain). If Germany was selected, sales for France and Spain could also be declared and paid for in Germany. Registration in France and Spain is not required.
The disadvantage is that the OSS procedure only registers the declaration and payment of VAT, but not offset or compensation for input VAT. This must still be obtained individually in each country – for example when purchasing advance services from EU subsidiaries – via the procedure for refunding input VAT.
Architectural services from Germany to Switzerland: B2B relationship
From the perspective of a German service provider, a taxable service always requires the place of service to be in Germany. In the B2B relationship, this is also based on the principle of location and is not in Switzerland if it concerns properties located in Switzerland. The service is not taxable in Germany.
According to Swiss law
From a Swiss perspective, the service can be taxed in reverse in Switzerland, since the place of performance according to Article 8, para. f) The VAT law is located in Germany. For the German service provider Request a VAT registration in Switzerland. that Ask for reverse payment obligation – similarly to § 13b UStG – does not apply in the present case, as this only applies to services whose place of performance is determined according to § 8, subsection of the VAT Act.
Since the German service provider does not only provide services that are exempt or exempt from the tax, and whose location is in Switzerland in accordance with § 8, subsection 1 of the VAT Act, there is a registration obligation according to the general rules. Consequently, one is foreign entrepreneur subject to tax and registrationif it worldwide obtained and not tax-free under Swiss law Turnover more than 100,000 CHF per year be. Normally, therefore, German entrepreneurs are subject to mandatory taxation in Switzerland from the first Swiss franc of sales. In this case, the German service provider is obliged to appoint a tax representative or tax representative established in Switzerland or Liechtenstein and to submit quarterly VAT returns.
As a result, the German service provider owes Swiss VAT (7.7%). At the same time, he is entitled to neutralization for input VAT deductions.
Architectural services from Germany to Switzerland: B2C relationship
According to Swiss law
From a Swiss perspective, there is still a service whose place of performance is different according to the placement principle determined and according to § 8 subsection 2 let. f) The VAT law is located in Switzerland. For the German service provider, this again raises the question of a registration obligation in Switzerland based on the same criteria as in the B2B case. Normally, non-exempt entrepreneurs are therefore subject to mandatory tax from the first Swiss franc of sales. An examination of the purchase tax is also excluded.
At the same time, the place of performance is determined from the perspective of a German service provider in accordance with § 3a (3) no. 1 UStG based on the location principle (Switzerland). The second benefit is not taxable in Germany.
As a result, the German service provider owes Swiss VAT (7.7%). At the same time, he is entitled to neutralization for input VAT deductions. There are no deviations from the B2B case.