The net tax rate is the convenient option: one industry rate applied to gross turnover, done. No sorting input tax receipts, no calculating input tax, filing twice a year instead of four times.
Convenient does not mean cheap, though. Under the net tax rate method the input tax is already covered by the rate as a lump sum. Anyone who buys a lot, invests, or needs materials is giving away real money. Here are the conditions, a worked example under both methods, and the rule of thumb for when the switch pays off.
How the net tax rate works
Under the net tax rate method you multiply your gross turnover, meaning turnover including tax, by the net tax rate the FTA has approved for your industry. The result is the tax you owe. There are no further steps, because the input tax is never determined.
The FTA works it through with an architect: approved rate 6.2 percent, half-year turnover CHF 400,000 including VAT, tax owed CHF 24,800.
One thing to keep straight: on your invoices you still show the statutory tax rate, so 8.1 percent in the normal case, not your net tax rate. The net tax rate is an arrangement between you and the FTA, not information for your customers.
Who may use the net tax rate
Two limits have to be met at the same time: taxable annual turnover including tax may not exceed CHF 5.024 million, and the tax owed may not exceed CHF 108,000 per year. Exceed either one and switching to the effective method is mandatory.
In the first year of tax liability, and in the year before switching to the net tax rate method, lower turnover limits also apply, graduated by your rate. At a net tax rate of 6.2 percent it is CHF 1.74 million, for example, and at 3.7 percent CHF 2.92 million. The full scale is on the FTA page on net tax and flat tax rates, which is in German.
Not every taxable person may use net tax rates, even when they stay inside the limits. The exceptions are listed in VAT Info 12, section 1.3.
The direct comparison
| Feature | Net rate | Effective |
|---|---|---|
| File without input tax receipts | ||
| Input tax on investments deductible | ||
| Usable without a turnover limit | up to CHF 5.024m | |
| Only two returns per year | ||
| Open to all activities | with exceptions |
The matrix shows the pattern: the net tax rate method wins on effort, the effective method wins on money as soon as input tax is involved. Which is why the question is not «which method is better» but «how high are my input costs».
Worked example: when the net tax rate costs more
Take a consultant with annual turnover of CHF 200,000 including VAT and a net tax rate of 6.2 percent.
Under the net tax rate method she owes CHF 12,400. That's it.
Under the effective method the calculation is different: CHF 200,000 gross at 8.1 percent gives output tax of roughly CHF 14,986. From that she deducts input tax. If she spent CHF 40,000 including VAT on software, office and materials during the year, that is roughly CHF 2,997 of input tax. Around CHF 11,989 remains.
In this case the effective method is a good CHF 400 cheaper, despite the extra effort. The tipping point sits at roughly CHF 34,500 of input costs including VAT per year: below that the net tax rate is cheaper, above it the effective method. Other rates shift the line, but the principle holds.
Run the numbers from your last financial year before you switch. The rule of thumb «services mean net tax rate» is often right, but not if you license a lot of software, buy materials, or are planning larger investments.
Which method typically suits whom
The limits decide whether you may choose. Your cost structure decides what you should choose.
The net tax rate method suits low input costs and a business that mainly sells time. Consulting, coaching, therapy, teaching, many trades without a large materials component: if your expenses are essentially rent, insurance and some software, the flat rate usually costs less than the effort of evaluating every receipt.
Four situations argue for the effective method. First, a high materials share, as in retail or production. Second, larger investments, because you can deduct the full input tax on machinery, vehicles or fit-outs. Third, the build-up phase, where expenses exceed income and a regular input tax surplus arises that the FTA pays out. And fourth, exports, because zero-rated foreign turnover brings no advantage under the net tax rate method, while the effective method allows the full input tax deduction.
Strongly fluctuating years are a special case. The net tax rate is predictable, the effective method follows your actual figures. Anyone facing a year of investment is almost always better off with the effective method.
Flat tax rate: the related special case
The flat tax rate works the same way arithmetically, but is aimed at different organisations: public authorities and related areas such as private schools, hospitals or public transport companies, plus associations and foundations.
Two differences matter. First, no turnover limit applies to the flat tax rate, so these organisations can use it regardless of how large their turnover is. Second, flat tax rates are generally filed quarterly rather than half-yearly. Conversely, the net tax rate method is not available to them. So if you run an association and are looking for a simplification, you end up at the flat tax rate, not the net tax rate.
What changed in 2025
Two changes affect exactly the businesses for which the net tax rate is attractive.
First, more than two net tax rates per company are now possible. The 10 percent rule applies: each activity accounting for more than 10 percent of total taxable turnover uses its own corresponding rate.
Second, mixed industries and the 50 percent rule have been abolished. A sports shop used to be able to report secondary activities at its main rate as long as they stayed below 50 percent of turnover. Today every activity above 10 percent is reported at its own rate. For businesses with several lines of work that means turnover has to be cleanly separated by activity in the books, or the return cannot be correct.
The special procedures for export deliveries, notional input tax and margin taxation have also been dropped, and the net tax rate for travel agencies acting purely as retailers has been removed. Details are on the FTA page on net tax rates from 2025, in German.
How to switch methods
Both switches are requested in the FTA portal under the reporting arrangements in the «VAT return» service. Since 2025 input tax corrections apply in both directions:
- From effective to net rate: you have to repay the input tax previously deducted on the current value of your goods and services. That runs through box 415 of the last return before the change.
- From net rate to effective: you can claim the tax on the current value, through box 410 of the first return after the change.
Conversely, switching to the effective method shortly before an investment is attractive, because you can claim the tax on the current value of the goods you already own.
VAT Info 12 governs the minimum periods and deadlines to observe, sections 2.2.2 and 3.2.2. So don't plan the switch spontaneously mid-year; plan it together with the annual closing, and have the records for the affected assets ready: the correction needs acquisition value, year of acquisition and depreciation.
A second piece of practical advice: don't change the accounting method and the reporting frequency at the same time. Doing both at once is a known source of errors, and if something goes wrong it is hard to say which change caused it.
Three mistakes that cost money under the net tax rate
The first is the classic: choose the net tax rate, then invest. The input tax on a new vehicle, a machine or a shop fit-out is lost under the net tax rate method, because it is already covered by the rate as a lump sum. If you are planning a larger purchase, run both variants first.
The second affects businesses with several lines of work. Since the 50 percent rule was dropped, every activity above 10 percent of turnover has to be reported at its own rate. If the books don't separate turnover cleanly by activity, that cannot be declared correctly at all. This is not a formality: it leads to an additional assessment in an audit.
The third is quiet drift. The net tax rate is requested once and then often goes unquestioned for years, even as the business changes. Anyone who has moved from pure services to a business buying materials may have been paying too much for years. Checking once a year takes ten minutes when the figures are current.
The net tax rate in Infinity: what works and what doesn't
The net tax rate simplifies the return, not the bookkeeping. You still have to record your turnover in full, and separately by rate if you have several activities. And you need the records of your expenses anyway: for the income statement, for the tax return and for the retention obligation.
In Infinity, the Swiss AI accounting, you choose your accounting method during setup or later in the VAT settings. Under either method you issue invoices at the statutory rates of 8.1, 3.8 or 2.6 percent; your individual net tax rate stays internal.
Being straight about the feature set: Infinity calculates the VAT return under the effective method quarterly for you, as part of Infinity Pro. There is currently no ready-made net rate return, because individual net tax rates cannot be stored yet. Instead you take the period's turnover from the income statement and multiply it by your rate, which is a two-minute calculation.
A practical trick if you apply several rates: book the revenue of the different activities to separate revenue accounts. You can then read turnover per activity straight from the income statement and apply the relevant rate. That is exactly the separation the rules have required since the 50 percent rule was dropped. The details are in the documentation on the net tax rate, which is in German.
If you are not yet liable for VAT and want to register voluntarily, the effective method is the more comfortable route in Infinity, and you may benefit from tax credits. How the return then works in practice is covered in the article on VAT deadlines and the FTA portal.
Frequently asked questions about the net tax rate
At what turnover is the net tax rate no longer possible?
Taxable annual turnover including tax may not exceed CHF 5.024 million and the tax owed may not exceed CHF 108,000 per year. Exceed either value and you must switch to the effective method.
Do I have to show my net tax rate on the invoice?
No. On the invoice you show the statutory tax rate, normally 8.1 percent. The net tax rate only serves to calculate the tax owed to the FTA.
Can I apply several net tax rates?
Yes. Since 1 January 2025 more than two net tax rates are possible. The 10 percent rule applies: each activity accounting for more than 10 percent of total taxable turnover uses its own rate.
How often do I have to file under the net tax rate?
As a rule half-yearly, so twice a year. Under the effective method quarterly filing is the standard.
Can I produce the net rate return in Infinity?
Not currently as a finished form, because individual net tax rates cannot be stored yet. You take the period's turnover from the income statement and multiply it by your rate. The return under the effective method, by contrast, is calculated quarterly for you by Infinity.
Figures instead of gut feeling
Which method is cheaper depends on a single number: your input costs. With continuously maintained books you can see it at any time, instead of estimating it once a year.
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