Flat Rate VAT Method as of January 1, 2025

What changes under the flat rate VAT method?

As of January 1, 2025, relevant changes will take effect for companies that account for VAT using the flat rate method.

These adjustments particularly affect changes to the accounting method, input tax corrections, and the application for additional flat tax rates.

Key changes at a glance

Corrections when changing the accounting method

From the effective method to the flat rate VAT method: Companies must correct the input tax previously deducted based on the current value of goods and services and repay it to the ESTV. This correction is made via code 415 in the final VAT return before the change.

From the flat rate VAT method to the effective method: Companies may claim the input tax existing at the time of the change based on the current value. The correction is made in the first VAT return after the change via code 410.

Important: A change is only possible after a full tax period.

Review of flat tax rates

The Swiss Federal Tax Administration (ESTV) has reviewed the existing flat tax rates and partially redefined them. The adjusted rates are automatically displayed in the VAT returns. Companies do not need to take any action.

Abolition of special procedures

As of 2025, certain procedures will no longer apply. These include:

• Export supplies (Form 1050)
• Notional input tax deduction (Form 1055)
• Margin taxation (Form 1056)

Application for additional flat tax rates

For activities that require an additional flat tax rate, this can now be applied for and declared directly in the VAT return. The ESTV will review and approve these retrospectively.

Companies should ensure that different activities and services are recorded separately in bookkeeping according to the respective flat tax rates.

Practical implementation: What do companies need to do now?

Assess the impact: Companies should analyze the new flat tax rates and the changes and ensure that bookkeeping is prepared to separate the various activities.

Notify a change of accounting method: Change from the flat rate VAT method to the effective method: Report this change to the ESTV via the contact form by February 28, 2025.

Change from the effective method to the flat rate VAT method: Submit the declaration for the flat rate VAT method to the ESTV for review.

Adjust bookkeeping: All activities requiring different flat tax rates must be recorded separately. Complete documentation facilitates later declaration and review.