Sales taxes are taxes on your purchases, sales, and services. They apply, for example, to receivables and invoices. Make sure that you apply the VAT rates correctly and show the VAT on your invoices.
Compliance with VAT rules is crucial to avoid potential problems with tax authorities.
What is the value added tax?
Value added tax (VAT) is one of the most important indirect taxes we have in Switzerland and is based on the idea that the end consumer contributes to the state budget when he consumes.
However, to make this easier, the tax is collected by companies (manufacturers, retailers, service providers, etc.). These companies must either include VAT in the selling price or show it separately on the invoice. The VAT is ultimately collected by the consumer and then handed over to the state.
Why do companies have to pay VAT?
It is a common misconception that VAT should tax companies. The idea of VAT is that the tax is at the expense of consumers. The VAT is ultimately collected from consumers by companies and then handed over to the state.
VAT liability in Switzerland
In principle, you are subject to value added tax if you independently carry out a professional or commercial activity in which you appear publicly under your own name (own name or a company name). This also applies if you are not registered in the commercial register.
Who is exempt from paying VAT?
You are still exempt from this tax liability of up to 100,000 CHF in annual turnover (at home and abroad). For voluntary sports and cultural associations and non-profit institutions, this limit is 250,000 Fr.
Because you are still exempt from tax due to sales, it is recommended that you expressly note this on the invoice so that the recipient does not attempt to claim incorrect input tax deductions.
Voluntary imputment of VAT
It is also possible to voluntarily subject yourself to value added tax. This means that you subject your sales to VAT, even if you haven't reached the sales limits yet.
Voluntary subordination is worthwhile in these cases:
- If you make large investments to get back the VAT you paid (e.g. expensive film equipment)
- If you mainly sell to companies instead of private individuals
- If you export a lot of goods from Switzerland
- If you purchase a lot of services from abroad (subject: purchase tax)
What is the input tax deduction?
The input tax deduction makes it possible to deduct the Swiss value added tax paid on purchases of goods and services from your own VAT liability.
This mechanism helps to avoid double taxation and reduces the effective tax burden on the company.
This means that you get back the money you paid in VAT and only pay the difference to the tax administration. This helps to avoid double taxation and reduces your effective tax burden.
If you have paid more input tax in a tax period than you owe in VAT on your sales, you will even receive a credit from the tax administration.
Current VAT rates in 2025
There are three different VAT rates in Switzerland:
- Normal sales (8.1%): Domestic taxable income
- Turnover from accommodation (3.8%): Proceeds from providing accommodation or related breakfast
- Sales at a reduced rate (2.6%): Proceeds from deliveries such as certain foods, newspapers, books, etc.
This is due to political reasons, as lower taxation is required for certain services, such as in the hotel industry, food or medicines.
You'll find a full list of reduced benefits on the official website of the tax administration.
Show net vs. gross value added tax
There are various ways in which you can offset sales subject to VAT in your receivables:
- Net sales: VAT is added to your prices.
- Gross sales: VAT is already included in your prices.
The quotation of net prices is particularly common when you sell to companies, as companies can reclaim VAT and only bear the net costs.
Registering for VAT
You can register for VAT online on the website of the Federal Tax Administration ESTV do it — even if you are not registered in the commercial register (in this case, select the link “Please enter company data manually” in the online tool).
Note that since January 1, 2025, there has been an online obligation and it is no longer possible to submit the VAT form on paper.
FIScal year upon registration
For the fiscal year, the calendar year is recommended in most cases, with an abbreviated first year until 31.12., if you started your business activity during a short period of time.
Net tax rate or effective method
Up to an annual turnover of around 5 million francs, you also have the option of simplified billing (“net tax rate”), in which you only state the income and the tax administration estimates your actual tax burden based on the industry.
However, this can lead to a higher tax burden and you cannot benefit from tax credits from your actual input taxes if you initially have many expenses but little income.
If you work with accounting software, we therefore recommend normal VAT reporting, as effective billing is very automated with modern tools.
Agreed vs. received remuneration
Billing based on agreed pay is more common and requires fewer corrections if you work with accounting software.
Carry out VAT statements
You then usually complete VAT statements on a quarterly basis in the tax administration's ePortal. After logging in, you will have access there. Since 2025, paper statements have not been accepted anymore.
Modern accounting tools such as infinity.swiss help you process your VAT faster.
Further information
You can find more information in the Practical publication VAT-Info 19 from the Federal Tax Administration.
