Switzerland Gambling — Tax: What is the tax take?

Capitalisation / Bank guarantees. Not required. However, the operator need to show that he has adequate financing available to pay all current and reasonably estimated prospective obligations in respect of prize payouts from gambling activities and to ensure there is adequate working capital to finance ongoing operations. The application fees for a casino concession amounts to CHF 100'000 and CHF 150’000 if the application is for a concession together with a concession extension for online gambling. The application fees for a large-scale license are the following: operator license: CHF 5’000 to CHF 75’000 license for the game itself: CHF 2’500 to CHF 50’000 Casino taxes The MGA regulates the Casino Tax. Gross gaming revenue is subject to the Casino Tax, whereby the gross gaming revenue is defined as the difference between all stakes and all winnings duly paid out. There are different rates applicable for terrestrial casinos and online games. Terrestrial casinos: the basic tax rate is 40% (up to CHF 10 Mio. gross gaming revenue). The federal government can change the current level of taxation rates up to 80% (Art. 120 MGA). Online gaming: the basic tax rate is 20% (up to CHF 3 Mio. gross gaming revenue) and can be increased up to 80% (Art. 120 MGA). The term “Casino” (Spielbank) is not further defined in the MGA. One cannot deduce of the MGA whether the Casino Tax is only due for permitted (licensed) casinos or for everybody who provides the same services legally or illegally. However, some articles of the MGA would not make sense if the term “Casino” would not be limited to licensed casinos only. ## VAT Based on the Swiss VAT Law and the Ordinance to the Swiss VAT Law, the supply of gaming activities in Switzerland, subject to a separate casino tax according to art. 119 MGA (or the generated net profit is used in full for charitable purposes within the meaning of art. 125 MGA), is Swiss VAT exempt without the right to deduct input VAT. Hence, this treatment applies only to licensed activities under the MGA. Therefore, the supply of gaming activities outside of the MGA (e.g., by foreign gaming operators) is generally qualified as a taxable service, whereas certain activities might fall under the category of telecommunication and electronic services (art. 10 of the ordinance to the Swiss VAT Law and art. 10 para. 2 let. B of the Swiss VAT Law). If telecommunication and electronic services are performed to private individuals domiciled in Switzerland and the foreign service provider has a worldwide turnover in the amount of more than CHF 100’000, a mandatory Swiss VAT liability of the foreign service provider exists, whereas the standard Swiss VAT rate applicable to such services is 8.1%. With regard to the qualification of sports betting services rendered by foreign gaming operators, a Federal Court decision was issued in October 2024 (9C_482/2024). The Federal Court concluded that although the human interventions claimed by the appellant were of considerable importance, the human involvement in this case took place before or outside of the service provided on a contractual basis. A service relationship is only established when a customer places a bet at the odds offered. According to the Federal Court, customer support is also not part of the actual service ("merely an associated function" of the [electronic] service) and therefore does not prevent online betting from being classified as an electronic service. Hence, the offering of online sports betting or online casino by a foreign gaming operator to private individuals domiciled in Switzerland triggers a VAT liability of the foreign gaming operator in Switzerland, even if there is no operational substance located in Switzerland. Not complying with such requirements can be fined and can have criminal consequences. According to art. 94 of the Swiss VAT Act, the Federal Tax Authority may require security for anticipated debts in the case of taxable persons without a domicile, registered office, or permanent establishment in Switzerland. The Swiss tax representative cannot be held liable for the VAT liability of the taxable person. If a foreign business does not register for Swiss VAT contrary to the applicable provisions, the Federal Tax Authority can only collect the Swiss VAT owed within the framework of international administrative assistance. However, the actual collection of the Swiss VAT owed within the scope of international administrative assistance is only possible to a very limited extent in the case of foreign companies. In any case, the conduct must be relevant under criminal law. In the case of non-European countries, prosecution is generally not possible at all. Withholding taxes According to the new art. 6 of the Withholding Tax Act, money games, lotteries, and games of skill for sales promotions that are not tax-exempt according to the Direct Federal Tax Act are subject to 35% withholding tax. However, winnings from foreign money games should not be subject to Swiss withholding tax according to the published practice of the tax authorities. Swiss corporations ("AG"), limited liability companies ("GmbH"), companies with unlimited partners ("KolG"), cooperatives ("Genossenschaft"), foundations ("Stiftung"), associations ("Verein"), and investment trusts with direct ownership in real estates ("Anlagefonds mit direktem Grundbesitz") are generally taxable persons for Swiss tax purposes (exceptions may apply for certain organizations). In addition, foreign legal entities that have their effective place of management in Switzerland are tax residents in Switzerland as well. Furthermore, non-resident corporations with a permanent establishment or real estate in Switzerland are deemed resident for tax purposes through economic affiliation. Players Winnings from terrestrial casinos are tax-exempt. This also applies to winnings from online casino games and lotteries, sports betting or large games of skill up to CHF 1 Mio., if the games are licensed in Switzerland. Winnings from small games (not executed automatically, intercantonal or online) are tax-free if they are licensed by the competent cantonal authorities. Winnings from lotteries or games of skill for sales promotions are tax-free up to CHF 1’000. Winnings from foreign casinos, i.e. non-licensed games, are fully taxed.