The current VAT Law states in Art. 22 that the option for the taxation of supplies exempt from the tax without credit can be made only if the tax is openly disclosed. Art. 39 VAT Ordinance clarifies that the exercise of the option can also be notified to the FTA in another manner, if the taxpayer cannot opt by open disclosure of the tax (e.g. because no supplies have yet been rendered, which happens often when constructing commercial properties).
In the recently published decision (2C_215/2014, judgement of 10 October 2014; http://relevancy.bger.ch/cgi-bin/JumpCGI?id=10.10.2014_2C_215/2014&lang=de) the Federal Court confirmed the decision of the Federal Administrative Court A-3779/2013 of 9 January 2014 to the effect that, for want of an option by open disclosure of the tax, the match fees raised by a golf club are turnovers exempt from the tax without credit. The Federal Court made this decision although the golf club had openly declared the VAT on the supplies in question in its periodical returns to the FTA and had paid the tax.
The conclusion to be drawn from the Federal Court’s decision must be that the taxpayer must openly disclose to the recipient of the supply on an invoice (or an equivalent document) the tax option, although the present Art. 39 VAT Ordinance states that the exercise of the option can also be conveyed to the FTA in another manner. Nonetheless disclosure of the tax is therefore mandatory and constitutes a formal requirement – even if that probably cannot have been the will of the legislative. If namely this had been the intention of the legislative, it would have mandatorily prescribed for all cases the issue of an invoice.
In June 2014 the Federal Council opened the consultation to a further reform of the VAT Law, based on which Art. 39 VAT Ordinance is to be integrated into Art. 22 VAT Law. From the explanations to the draft it seems apparent that the option must always be evident from the invoice, unless open disclosure of the tax were not possible. This would leave everything unchanged and the rule would be no clearer than it is today. Therefore the consultative committee has drawn up an alternative proposal – which can only be welcomed – according to which a supply exempt from the tax without credit can be taxed either by open disclosure of the tax or by declaration in the VAT return. This alternative would ensure that the „open disclosure“ is understood to mean that the FTA receives notice of the option (and not the recipient of the supply).