VAT ZEV / Heat charge settlement

Details, for example

If company A orders 100 kWh of energy for CHF 100 net from the supplier, it receives an invoice from the VAT-registered energy supplier for the 100 kWh of energy (CHF 100 net) + VAT (8.1%, CHF 8.10) totaling CHF 108.10.

Company A pays, the energy supplier pays the CHF 8.10 to the government and keeps CHF 100 for its services.

If Company A were to resell this energy to a consumer (in this case without profit, for better understanding), Company A would offer the consumer the 100 kWh of energy at a price of CHF 100 and would again charge VAT itself, as Company A is subject to VAT.

The invoice to the consumer is therefore as follows:

100 kWh of energy (CHF 100 net) + VAT (8.1%, CHF 8.10) of CHF 108.10.

The consumer pays CHF 108.10 to Company A.

Company A receives CHF 100 for the energy and pays CHF 8.10 in VAT to the government.

Now for the important point:  
Company A can now claim input tax deduction on the VAT amounts to be paid before settling the debt.

Company A can deduct CHF 8.10 from the input tax deduction (previously paid to the energy supplier in the energy bill).
Since there was no surcharge on the energy price (no profit), the debt from the sales is CHF 8.10 - the input tax deduction = CHF 0.Company A therefore does not have to pay anything extra; CHF 100 was spent and CHF 100 was received for company A.

The government has had the CHF 8.10 in the energy account since the beginning, and the consumer in this case is not subject to VAT and therefore cannot reclaim the CHF 8.10. This means that only the end consumer pays the VAT on the product or service.

All parties in between can reclaim the VAT.

VAT liability may arise in the following circumstances:

1. Turnover from energy and service sales by the ZEV > CHF 100,000/year --> Automatic tax liability

2. Voluntary submission of the ZEV to VAT liability (ZEV option)

In both cases, this must be reported to the tax office and a sales tax number must be obtained for the ZEV.

If either of these applies, the following will happen with regard to the ZEV:

The ZEV is liable for VAT:

1. The ZEV charges VAT on all electricity sales (grid energy, solar energy, and battery power) and shows this on its invoices.

2. The ZEV is entitled to deduct input tax for purchases and services related to electrical energy.

3. The ZEV must pay the VAT to the state after deducting input tax.

The ZEV is not subject to VAT:

1. Energy prices are charged at gross prices without VAT information.

2. Services and ancillary energy costs are charged at gross prices without VAT information.

Details:

The energy is generated in the property by a heat pump with a hot water tank and then distributed throughout the property.

In this case, it is important to understand that the question of whether the ZEV is subject to VAT is not important.

Since the energy in the property is generated by equipment owned by the property owner, the question now arises as to whether the property owner is subject to VAT.

The ZEV bills this energy as a service to the property owner under mandate. The ZEV must charge VAT for the billing service itself, provided it is subject to VAT, but not for the energy and ancillary costs to be distributed.

In principle, the property owner may be liable for VAT for the same reasons:

Turnover from taxable services > CHF 100,000/year --> Automatic tax liabilityTaxable services include, for example, the rental of vacation homes or parking spaces not related to residential rents.
Normal residential rents themselves are not taxable services.

Through voluntary submission of the property to VAT liability (option)

The most common option is voluntary submission. An obligation based on turnover is rather rare, as the rental of purely residential space is not a taxable service.

Opting (partial opting) for a property

The decision to opt for a property must be made by the owner of the property. It can be a smart move for the leasing of commercial space, as the businesses can then deduct the VAT in advance.

If the decision to opt is made, the entire property owned by the same landlord is opted for and voluntarily subject to VAT.

This is important to understand because this now subjects all parts of the property owned by this landlord to VAT. The exception is purely residential space, which cannot be opted for by law.

Example:

If the building with 4 units (2x commercial space, 2x residential space) is wholly owned by owner A and he opts in, he is effectively partially opted in for all parts of the property that are not purely residential space.

• Commercial space 1 --> opted

• Commercial space 2 --> opted

• Residential space 1 --> not opted, because residential space is exempt from VAT

• Residential space 2 --> not opted, because residential space is exempt from VAT

The following must now happen for all opted units:

Heating/water invoice amounts net including VAT statement and gross amount.

Service charges Net invoice amounts including VAT statement and gross amount

Net rent including VAT and statement! (When opting for the property, the rent is also subject to VAT).

For all non-opted units (living spaces):

• Heating/water invoice amounts at gross prices without VAT.

• Ancillary costs invoice amounts at gross prices without VAT.

In addition to being liable for tax, the property owner is now also eligible for VAT deduction for all services relating to the opted-in parts of the property, but not for the non-opted-in parts.

If the ZEV acts as a service provider for heat/water and ancillary costs in the mandate, the following is important:

• The invoice to the tenant must clearly state that the invoice was issued on behalf of the landlord.
  If this is not clearly stated, the sender of the invoice is considered to be the issuer of the invoice. Since the invoices for rent and ancillary costs would then not come from the same issuer, the claim to VAT exemption for heating/water and ancillary costs would lapse, as they would no longer be considered part of the rent!
  
  A note:
  Invoicing and dispatch on behalf of your landlord XXXXXXXXXX
  Is the landlord liable for tax with the landlord's VAT number?