Services of architects are a category of possible services in connection with the preparation or the coordination of construction services. Examples of services of architects are among other the drawing up of projects, plans, models, fee quotes, supervision of construction work, but also the transfer or assignment of rights in rem. As soon as these services are rendered in connection with a particular immovable property located in Switzerland (i.e. the Swiss tax territory) they will fall within the scope of Swiss VAT. In the latter case, when such services are provided by a foreign person or company, the issue of liability of that foreign person or company for purposes of Swiss VAT may rise.
Article 8 Par. 2 letter f Swiss VAT Act determines that the place of supply of services in connection with immovable property is the place where the property is situated. Among the services for which this rule applies are the services of architects as described above. In VAT Business Sector Info No. 4 on Building trade, the Swiss tax administration has laid down specific practice rules applying to services of architects.
- moment of VAT registration: often foreign architects register too late for purposes of Swiss VAT, for example once the construction work on site in Switzerland has started, although the contract was assigned some time before and the customer has already been charged down payments or sent invoices. At the moment the architect has signed a contract with the customer for the supply of architecture services in connection with immovable property located in Switzerland, the architect will have to verify a possible Swiss VAT liability, and register for purposes of Swiss VAT within 30 days from the moment (i.e. date of signature of the contract) the conditions for a compulsory Swiss VAT liability have been fulfilled.
- sub-contracting: the fact that an architect is merely acting as a sub-contractor or that he uses one or more sub-contractors does not exonerate him from a Swiss VAT liability when the immovable property is located in Switzerland and the conditions for his Swiss VAT libility have been fulfilled.
- foreign customer: for Swiss VAT purposes, as would be the case under the Directive No. 2006/112/EC, is decisive where the immovable property is located. Consequently, even when the customer has its place of residence outside Switzerland, Swiss VAT will apply when the architecture services are supplied in connection with immovable property located in Switzerland.
- re-invoicing: the services that a foreign architect will supply to his customer will not always be limited to his own architecture services. Regularly it can be seen that in the scope of a project the architect will also re-invoice supplies of goods of services, which he received from sub-contractors- to his customer. Basically, when re-invoicing these purchased supplies of goods and services are re-invoiced (as such) to the customer, the Swiss VAT treatment will be determined by the character that these supplies and services have for purposes of Swiss VAT. This VAT treatment may be different than the Swiss VAT treatment that applies on the architecture services he provides/has provided to the customer.
- import of goods: generally speaking, in the scope of an engagement for the supply of architecture services a foreign architect will normally not necessarily make imports of goods into Switzerland. Nevertheless, depending the contract, it is possible that a foreign architect supplies interior design services and in that scope is also responsible for the supply of furniture or objects of art. Often such interior design work is finished once accepted, after inspection, by the customer. Under such circumstances the architect -assumed registered for purposes of Swiss VAT- will act as importer for purposes of Swiss VAT and make a subsequent domestic supply once the customer has accepted the supplied goods after their installation and inspection. The Swiss VAT paid at import will be deducted in the Swiss quarterly VAT return of the foreign architect.
- interior design: a foreign supplier of interior design services will become liable for purposes of Swiss VAT when these services concern a particular immovable property located in Switzerland, and the conditions for compulsory VAT liability have been met. For purposes of Swiss VAT is irrelevant that the customer has its residence outside Switzerland and that the immovable property in Switzerland is only a second home.