VAT and customs health check in cross-border relations between Germany and Switzerland

What is a VAT and customs health check?

A health check is a structured, risk-based analysis of selected cross-border processes, transactions and documentation. It specifically focuses on the interfaces between VAT, customs, transfer pricing and operational processes in finance, tax, management accounting and logistics. The goal is to highlight differences between tax requirements and operational implementation and to provide management with a reliable basis for decision-making.

Why is a cross-border health check so important?

Cross-border matters between the EU and a third country like Switzerland are particularly prone to errors. Reasons typically include:

• A high level of complexity due to differing legal systems and system logic (EU vs. third countries)
• Increased risks at the interfaces between customs and VAT
• High financial consequences in the event of errors (e.g. additional charges, import VAT, penalties)
• Increasing frequency of audits by tax and customs authorities
• Extensive potential for optimisation along the supply chain

Key audit areas

Import VAT and input tax deduction
Have import assessments been recorded correctly? Has input tax deduction been taken care of (importer, control over the goods, documentation)? Are customs declarations and the accounting reconciled?

Places of supply and reverse charge
Are places of supply properly determined, particularly where they differ from the recipient’s place of business (e.g. property-related services, event services, installation services, supplies of work and materials, and processed goods)? Have issues been identified where reverse charge does not apply?

Chain transactions and importer role
Is the importer’s role clearly defined? How are import chain transactions treated for VAT and customs purposes? Are there any inconsistencies between Incoterms (standardised international trade terms that govern the allocation of costs, risks and responsibilities between the seller and the purchaser in international trade) and the tax treatment?

Incoterms and place of supply of goods
Do the contractually agreed Incoterms match actual practice? Has the place of supply of goods been correctly derived?

Transfer pricing and fiscal year-end true-up
How are transfer pricing adjustments reflected in customs value and VAT? Are retrospective adjustments correctly accounted for and documented?

Customs procedure
Are appropriate customs procedures used (e.g. inward or outward processing, temporary admission)? Are the necessary authorisations in place and are the processes properly documented?

Mail order/distance selling
Are delivery thresholds, VAT registrations and local VAT obligations observed correctly?

Company vehicles and employee assignments
Are cross-border use and services correctly recorded for VAT purposes?

How does the health check work?

• Define goals and scope at the kick-off meeting
• Analyse relevant data, documents and transactions
• Review actual processes and interfaces
• Assess risks and potential for optimisation
• Final report with prioritised recommendations for action

The value to you at a glance

• Transparency regarding tax and customs risks
• Reduces liability and additional payment risks
• Identifies potential to increase efficiency and reduces costs
• Improves coordination between finance, tax and logistics
• Better preparation for operational and customs audits
• A reliable basis for management decision-making

Conclusion

A combined VAT and customs health check covering trade between Germany and Switzerland not only provides certainty but also offers a comprehensive overview of complex cross-border issues. It is precisely at the interfaces between different types of tax where the greatest risks arise – but also where the greatest potential for optimisation lies. This provides companies with a firm foundation for improving their processes long-term and ensuring legal compliance.