For purposes of Swiss VAT, activities of a cultural nature are not limited to those of in particular artists or performers, but also cover activities by persons who exercise other functions in the domain of culture (booking agents, organizers of cultural events, publishers, exploitation society/intellectual property society.
A performer is any natural person who performs a work or an expression of folklore or who participates artistically in the performance of such a work (Article 33 Par. 1 Swiss Copyright Act).
Article 8 Par. 2 letter c Swiss VAT Act determines the place of supply of activities of a cultural nature, including services of the event organiser and related services. Article 6a Swiss VAT regulation (‘MWSTV’) refines the place of supply of activities of a cultural nature while transporting passengers in border areas.
In Article 21 Par. 2 No. 14 and No. 16 Swiss VAT Act are the conditions laid down under which specific activities of a cultural nature are exempted from Swiss VAT.
Swiss VAT Business Info No. 23 on Culture describes the administrative practice of the Swiss tax authorities regarding VAT and activities of a cultural nature.
- domestic supplies: foreign artists or performers that perform -against consideration- in Switzerland will not be able to apply successfully the regulation for refund of Swiss VAT to foreign companies. Namely, due to the rules on the place of supply of transactions, their acts in Switzerland will be assumed to be supplied within the Swiss tax territory. Domestic supplies block the entitlement to VAT refund -apart from a very limited number of exceptions.
The impossibility of Swiss VAT refund for foreign artists or performers (and similar) is partly caused by the way the Swiss VAT system allows for reverse charge and the link between the regulation of reverse charge and the regulation for Swiss VAT refund.
- VAT exemption: generally, the execution of activities of a cultural nature is subject to a VAT exemption (Article 21 Par. 2 No. 14 and No. 16 Swiss VAT Act). However, taxable persons registered for purposes of Swiss VAT have the possibility to opt for taxtion (Article 22 Swiss VAT Act). However as experience shows, a request for Swiss VAT refund submitted by a foreign artist/performer or company active in the field of culture will be rejected by the Swiss tax authorities on the ground that supplies of a cultural nature are exempted from Swiss VAT. Thus, the Swiss tax authorities do not place a foreign VAT registered artist/performer or company active in the field of culture on the same footing as a Swiss VAT registered taxable person that has opted for taxation.
- distinct from other activities: the activities of foreign artists or performers must be distinguished from other specific activities to the extent that the latter are subject to special regulations, like for arts, sports or activities related to business incentives.
- selling of tickets: the sale of tickets for concerts or similar cultural events that take place within Switzerland is exempted from Swiss VAT (Article 21 Par. 2 No. 14 Swiss VAT Act) when these tickets are sold by the seller in his own name. However, when these tickets are sold by an intermediary with its place of business within Switzerland to a foreign buyer (i.e. with its place of business or branch outside Switzerland), then that sale is not subject to Swiss VAT. Namely, in that case the place of supply is the place where the recipient has its place of business.
A Geneva based company that acts as intermediary for the sale of concert, sports, theatre or festival tickets through an online marketplace is renowned for charging Swiss VAT to its buyers, despite the fact that Swiss VAT is not due. Foreign corporate buyers cannot claim this undue charged Swiss VAT back under the regulation for refund of Swiss VAT to foreign companies. Instead, corporate buyers must claim the charged VAT directly from the intermediary that charged the undue Swiss VAT.