News & Trends – Industrial Tariffs Switzerland

Abolition of industrial tariffs in Switzerland decided

25.02.2022

Foto eines schweizerischen Grenzzeichens an einer Straße
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From the beginning of 2024, there will no longer be import duties on industrial products in Switzerland. This was decided by the Federal Council at the beginning of February 2022. The measure strengthens Switzerland as a business location and supports the revival of the economy after the crisis. In this interview with Ute Saavedra Olarte, Attorney at Law (DE), LLM Taxation, Senior Consultant Customs and VAT, Gerlach AG, Switzerland, you will learn all the essential info on the abolition of industrial duties in Switzerland.

Ms Saavedra Olarte, on 2 February 2022 the Swiss Federal Council decided to abolish industrial tariffs at the turn of the year 2024. What exactly was decided?

On the one hand, it was decided to abolish industrial customs duties for imports into Switzerland, and on the other hand, it was decided to simplify the customs tariff structure [1] in Switzerland.

This means that industrial products [1] , which were previously still subject to customs duties, can now in principle be imported into Switzerland duty-free, i.e. without using a preferential agreement [2]. However, this exemption does not apply to agricultural products.

What are the advantages for suppliers and importers in the future?

In fact, suppliers of industrial products to Switzerland could now have the opportunity to reduce their sales price. This applies in any case if they were not already exempt from customs duties or if the exemption from customs duties could only be obtained through the use of preferential agreements of Switzerland or EFTA (free trade agreements or agreements with developing countries). In the latter case, the costs/risks for the preparation of the preferential proof of origin itself (e.g. EUR.1) or the authorisation as an approved exporter applied for for this purpose could possibly be omitted.

In addition to the customs amount itself, the advance payment fees of the customs service provider/freight forwarder are also omitted.

You emphasise the “could” – are there also challenges or stumbling blocks?

It should not be forgotten, also by suppliers both abroad and in Switzerland itself, that a large proportion of Swiss companies and thus of their customers subsequently export their products abroad themselves. These target markets, for their part, still have no plans for further tariff reductions.

If Swiss exporters have previously required proof of preference for subsequent imports into these foreign markets in order to benefit from preferential customs treatment (preferential origin), they will continue to do so.

Likewise, proof of so-called non-preferential origin will continue to be required if this was already currently necessary in order to access target markets at all or to avoid anti-dumping duties.

For these exporting companies, the preparation of the necessary proof of origin could now become more difficult and cost-intensive. In order to counter these difficulties, suppliers may also have to forego certain cost-saving potentials here.

(Depending on the constellation itself, this may also affect suppliers in Switzerland who in turn import input materials or goods and issue supplier declarations to Swiss customers).

The possible future challenges for the exporting company are based on the fact that for the calculation of origin required

  • for the calculation of origin for these imported products
  • now have to be procured and checked in a different or more complex way.

In any case, the exporting company should evaluate the need for action in this context in advance and in a timely manner.

Since the supplier is primarily responsible for providing these preliminary documents, this clarification should take place in consultation with him.

In addition, companies that export later may also have to coordinate with the customs service provider who makes the customs declaration for the input material. The latter recommendation is due to the following special feature (facilitation):

Quite a few companies in Switzerland belong to the so-called small or medium-sized enterprises (=SMEs). Not least for these, customs service providers have so far frequently, quasi “centralised”, taken over the verification of the preliminary documents (supplier’s preference certificates) upon import.

In the process, it was up to the customs service provider, in the sense of a point of entry for the most diverse types of proof of origin, to keep track of the very complex regulations of the possible proofs of origin in the context of the various agreements. He had to assess whether the type of proof of origin presented in each case and the form in which it was issued could be regarded as formally valid or not and, if necessary, provide assistance in requesting it from the supplier.

In the end, the later exporting company could, in the sense of facilitation

  • the import declaration (eVV Import) created on this basis “with ticked preference
  • as a preliminary document that is always the same in every situation, without any significant scope for checking, even for both types of origin mentioned above (preferential and non-preferential).

The same applies to importing companies in Switzerland that do not export later but issue supplier’s declarations to their customers.

In practice, this service was and is often associated with considerable risks for the customs service provider, both in terms of civil law and fines.

In addition, this service requires a valid proof of origin from the supplier at the time of the customs declaration, which makes such a “pre-service” by the customs service provider possible at all.

It is already becoming apparent for the future that many suppliers will now question the necessity of issuing such a proof of origin in view of the fact that imports are duty-free anyway. In view of the additional costs and risks involved, this does not seem incomprehensible. On the other hand, this would make the future provision of this pre-service by the customs service provider even more difficult.

What does this mean for existing clients or other companies? What should they pay attention to?

First of all, it must be noted that the obligation to declare customs will remain in place and, in our opinion, will not really become any easier. The declaration of the so-called preference concerns only one of 24 necessary fields.

Irrespective of customs duties, other duties such as VAT, VOC duties, mineral oil and automobile taxes will continue to be incurred and errors in the declaration can and will also lead to considerable fines in the future.

The obligation for proper tariff classification also remains in principle, even if the need for tariff elimination beyond the 6th digit no longer applies.

In addition, the Swiss Customs Administration is not bound by a tariff decision of a foreign authority. It is therefore advisable in future to at least compare this with the local understanding and, if necessary, to obtain binding tariff information from the Swiss customs administration as a safeguard.

The significance for the individual company in the form of an advantage or need for action cannot be answered in a blanket manner due to the initial situation described above. Our customers are both the suppliers, the recipients in Switzerland, but also the subsequent exporters and it therefore always depends on the individual situation.

However, with reference to the explanations given above, the following questions can perhaps be roughly outlined, depending on the respective role of the company.

For suppliers: 

Check cost-saving potential for imports, if applicable

  • Customs duties,
  • prepayment fees
  • Costs for preparing proof of preference (for authorisation as an approved exporter, EUR.1, securing know-how of staff for declaration of origin)

For suppliers and exporters/creators of supplier’s declarations, the following must also be taken into account:

(as supplier see right side of table, as exporter see left side of table)

Legal situation:

If the customs service provider makes the import customs declaration “without preference” in the absence of a proof of origin, the customs declaration (=eVV Import) can no longer be used as a preliminary document for the preferential or non-preferential origin, even though the import of goods itself is “duty-free”.

Resulting need for action for:
For suppliers:For subsequent exporters or issuers of supplier’s declarations (Switzerland):
Consultation with customers as to whether proof of origin is still required for this reason.After checking whether preliminary documents for proof of preference or non-preferential proof of origin were previously required for import into the subsequent destination country or whether such a document had to be issued at all.

If so,
Need for action depending on
Decision as to whether- Verification of preliminary documents (proof of origin) can or should be carried out in-house or externally by customs service providers in the future.

In-house verificationExternal verification (by customs service provider)
Establishment/securing of internal know-how (training/SOP etc.) etc.Arrangements with customs service providers and sub-suppliers (including those who issue Swiss supplier declarations)

Finally, it remains to be said that Gerlach AG is happy to support you as well as your customers in this regard, also within the framework of the consulting offer.

Are there any valuable informative website links for this?

Yes, I can recommend the website of SECO – State Secretariat for Economic Affairs here: https://www.seco.admin.ch/seco/de/home/Aussenwirtschaftspolitik_Wirtschaftliche_Zusammenarbeit/Wirtschaftsbeziehungen/Warenverkehr/Tarifpolitik/Aufhebung_Industriezoelle.html

[1] With a few exceptions from Chapters 25 to 97 of the Harmonised Tariff.

[2] Free trade agreements or so-called GSP agreements with developing countries, either bilaterally with Switzerland or as part of EFTA.

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