VAT consulting

Swiss Value Added Tax (VAT) is an indirect tax levied by the Confederation. It is considered the most important source of state revenue. Goods and services are taxed. The idea is that everyone who consumes contributes financially to the Swiss state. Companies are required by the VAT authority to collect VAT from consumers and remit it to the Confederation.

VAT is an indirect federal tax based on Art. 130 of the Federal Constitution. The tax base covers goods and services. Over the years, various VAT rates have been established:

Standard rate for goods and services: 8.1%
(Restaurant visits, vehicles, furniture, jewelry, machinery, …)

Special rate for accommodation including breakfast: 3.8%

Reduced rate for goods for daily use: 2.6%
(Food, medicines, newspapers, books, plants, …)

VAT exempt: 0%
(Health, education, culture, real estate)

The most important direct taxes due for individuals in Switzerland are income tax and wealth tax.

Income consists of self-employed or employed income, secondary income, insurance daily allowances, as well as returns on movable and immovable assets.

Wealth tax is a supplementary tax to income tax and is levied regardless of the level of income. Wealth tax covers total net assets, i.e., all assets minus liabilities and debts, as of December 31. Assets include movable assets (securities, cryptocurrencies, jewelry, gold, cash, …) and immovable assets (real estate in Switzerland and abroad).

In addition, there are other taxes such as poll tax, real estate capital gains tax, property tax, real estate transfer tax, inheritance tax, gift tax, and church tax.

Companies are subject to VAT from an annual turnover of CHF 100,000. Organizers of one-off sports and cultural events or village and neighborhood festivals are also subject to VAT once they generate more than CHF 100,000 from food, beverages, advertising, etc.

Non-profit institutions or non-profit, volunteer-based associations are required to register for VAT from an annual turnover of CHF 150,000.

Anyone who receives a service as a taxable, entrepreneurial person must pay VAT on it.

If this service is (further processed and) sold to a customer and the invoice also shows VAT, the company can reclaim the VAT paid from the Swiss Federal Tax Administration as an input tax deduction. This ensures that only the value added is effectively taxed.

The VAT number consists of the company identification number (UID) and the suffix VAT. The format is therefore CHE-123.456.789 VAT.

As a rule, the VAT number must be stated on invoices.

If a company does not meet the criteria for VAT liability (e.g., due to low turnover), it may voluntarily opt into VAT liability.

In certain cases, registration is advisable, for example for startups that generate low turnover but make larger investments and can therefore benefit from input tax deductions.

Companies that export predominantly abroad may also benefit from registering for VAT. Although no VAT is charged on exports, the company can still benefit from input tax deductions.

In addition, some companies benefit from the fact that potential customers cannot see that the company has a turnover of less than CHF 100,000. This means that voluntary VAT registration can also be advantageous for marketing reasons.

In the case of an indirect tax, the person who owes the tax (tax debtor) and the person who ultimately bears the economic burden of the tax (tax bearer) are not the same. The tax is passed on by the tax debtor to the tax bearer.

In the case of VAT, the consumer bears the tax (tax bearer), while the tax is levied on the individual companies (tax debtor).

During a VAT audit, the Swiss Federal Tax Administration (FTA) reviews the last five tax periods of a VAT-taxable entity.

We support you in preparing for the audit and thus minimize the risk of potential additional assessments. If you have any questions, we are always at your side.