VAT obligation due to parking lot rental

However, the rental of parking spaces is explicitly taxable. Provided that only exempt services (e.g. rental of residential real estate) or taxable services of less than CHF 100,000 are generated, a business is exempt from VAT.

As soon as the taxable turnover exceeds the limit of CHF 100,000 per company, the company must register in the VAT register for the following year without being requested to do so. With a large real estate portfolio, it is therefore important that this turnover limit of CHF 100,000 from taxable services is reviewed annually.

The turnover limit of CHF 100,000 could, for example, be exceeded by taxable services such as the rental of parking spaces to external tenants, key fees or also on-charging of tenant improvements (if compensated with a one-off payment).

However, in the case of the rental of parking spaces, the rental may also be treated as an ancillary service to the main lease of the real estate. Thus, the rental of the parking space shares the VAT fate of the rental of the real estate. However, the tenant of the real estate and the tenant of the parking lot must be identical. However, if a parking space is rented to an external tenant, this constitutes an independent taxable service.

In the case of large real estate portfolios, the management activities are often outsourced to various external service providers. However, since the taxable entity is the company as a whole (for example, a real estate company or an investment fund), the entire portfolio must be considered in each case when reviewing the turnover limit of CHF 100,000. In this respect, it is important that a VAT liability is reviewed annually across the entire real estate portfolio. Due to the different and divided responsibilities, this annual review is made more difficult or is often lost in the case of a constantly growing real estate portfolio.

If the verification was neglected and the VAT liability was discovered or reported too late, the FTA will verify the last 5 years (limitation period). Then the VAT will be subsequently charged with an interest of currently 4 %. If the report was intentionally omitted, additional criminal tax proceedings cannot be ruled out.

Since the tenants, especially of parking spaces, are often private individuals, it is often no longer possible to pass on the VAT to the tenants retrospectively. Accordingly, the landlord is stuck with the VAT until the next possible adjustment of the contract. In the case of tenants subject to VAT, the passing on of the VAT is regularly accepted, as these tenants can deduct the VAT as input tax.

We will be happy to assist you in verifying your VAT liability or registration in the Swiss VAT register, as well as with any other VAT-related questions you may have.