Reduction of the VAT obligation for associations

Exempted are, for example, statutory membership fees or admission fees for cultural and sporting events such as theatre, music concerts or football matches. These are not decisive for the turnover limit, nor are so-called non-remuneration such as donations and contributions from the public sector.

However, it is often the case that the relevant turnover limit of CHF 150,000 per year is exceeded, even for smaller associations or non-profit institutions, as a result of catering services (bars and festive events) or sponsoring. This not only leads to compulsory VAT registration, but also ties up considerable financial and administrative resources for these organisations. This is all the more objectionable as such organisations are often run by volunteers.

In the 2021 winter session, the Federal Assembly raised the turnover limit for the VAT obligation of non-profit, volunteer-run sports and cultural associations and non-profit institutions from the previous CHF 150,000 to the new CHF 250,000. The Federal Council will bring this change into force on 1 January 2023.

According to an estimate, around 180 associations and non-profit institutions can have themselves deleted from the VAT register because they do not reach the new turnover limit.

The decisive factor is the turnover of the year 2022 without the income exempted from VAT. If this turnover is less than CHF 250,000, deregistration from the VAT register is possible as of 1 January 2023. The deregistration must be submitted in writing to the Federal Tax Administration (FTA) by the end of February 2023. Without deregistration, the tax liability continues to apply.

Taxable persons can deregister at the end of a tax period. The deregistration must reach the FTA within 60 days of the end of the tax period. In the event of late deregistration, this will only come into effect in the following year.

Under certain circumstances, a voluntary VAT obligation may be worthwhile. Certain sales, such as spectator admissions, are only subject to the reduced tax rate of 2.5% VAT in the case of voluntary taxation (option). On the other hand, there is a right to input tax deduction for expenses in this area. If this includes many input taxes that can be claimed at the normal rate of 7.7% VAT, an input tax surplus may well arise (credit balance vis-à-vis the FTA).

However, a general recommendation cannot be given; the circumstances must always be assessed on a case-by-case basis. If you have any questions, please do not hesitate to contact us.

Elmar Schafer

VAT specialist
Specialist in finance and accounting with federal certificate

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Elmar Schafer

Vice-Director
VAT Specialist
Specialist in Finance and Accounting with a Federal Patent

T +41 26 492 78 52
es@core-partner.ch