VAT consulting with foresight

Swiss value added tax (VAT) is an indirect tax levied by the Confederation. It is considered the state’s most important source of revenue. Goods and services are taxed. The idea is that everyone who consumes something supports the Swiss state financially. The VAT authority requires companies to collect VAT from consumers and pay it over to the Confederation.

VAT is an indirect federal tax based on Art. 130 of the Federal Constitution. It is levied on goods and services. Over the years, different VAT rates have developed:

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 needs: 2.6%
(food, medicines, newspapers, books, plants, …)

Services in health care, education and culture as well as the rental of real estate are excluded from the tax (Art. 21 MWSTG). Here, there is no right to deduct input tax. This must be distinguished from genuine tax exemption at 0 percent (Art. 23 MWSTG), for example for exports, where the input tax deduction is retained.

All rates have applied since 1 January 2024. ONE! Treuhand checks for every mandate which rate applies to which service.

Companies are liable for VAT from a turnover of CHF 100,000. Organizers of one-off sports and cultural events or of village and neighborhood festivals are liable for VAT as well, as soon as they take in more than CHF 100,000 from food, drinks, advertising, etc.

Non-profit sports and cultural associations run on a voluntary basis and charitable organizations only become liable for VAT from an annual turnover of CHF 250,000 from supplies that are not excluded from the tax (Art. 10 para. 2 let. c MWSTG). For all other companies, the threshold is CHF 100,000.

Anyone who receives a service as a taxable person carrying out a business activity must pay VAT on it.

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

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

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

If a company does not meet the criteria for VAT liability (e.g. because its turnover is too low), it can voluntarily register for VAT.

In certain cases, registration makes sense, e.g. for startups that still generate low turnover but make larger investments and can therefore benefit from input tax deductions.

Registering for VAT can be an advantage for companies that export mostly abroad as well. No VAT is charged on exports, but this way the company can still benefit from input tax deductions.

For some companies, there is the added advantage that potential customers cannot see that the company has a turnover of less than CHF 100,000. Voluntarily registering for VAT can therefore also be an advantage for marketing reasons.

With an indirect tax, the person who owes the tax (tax debtor) and the person who economically bears the tax (tax bearer) are not the same. The tax debtor passes the tax on to the tax bearer.

With VAT, the consumer bears the burden (tax bearer). The tax is levied, however, on the individual companies (tax debtors).

During a VAT audit, the ESTV reviews the tax periods that are not yet time-barred. The limitation period for assessment expires five years after the end of the tax period, with an absolute limit of ten years. ONE! Treuhand prepares the documents and supports clients throughout the entire audit.

We help you prepare for the audit and thus minimize the risk of a possible additional assessment. If you have any questions, we are always at your side.

Under the effective method, companies report quarterly; under the net tax rate method, they report semi-annually. The return must be submitted to the ESTV within 60 days of the end of the period. ONE! Treuhand monitors these deadlines for all VAT mandates.