One of the most significant taxes in Switzerland is the value-added tax (Swiss VAT), which affects nearly all businesses. However, who is required to register? Which tax rates are applicable? How is the billing procedure carried out? In VAT accounting, mistakes can be costly. Everything you need to know about VAT in Switzerland, from registration to refunds, is covered in this article.

The key points in brief

• Businesses that generate CHF 100,000 or more in revenue from taxable services in Switzerland are subject to VAT responsibility.
• While some goods and services are subject to reduced rates of 2.6% and 3.8%, the usual VAT rate is 8.1%.
• VAT settlement occurs either quarterly or annually, depending on the selected settlement method.
• Businesses can lower their tax burden by claiming input tax.
• Penalties and additional costs may result from settlements that are incorrect or delayed.

1. Who in Switzerland is required to register for VAT?

In theory, any Swiss business that generates at least CHF 100,000 in revenue from taxable services each year is liable to VAT. This is true for both foreign and indigenous companies that sell goods or services in Switzerland.

Exclusions from the VAT requirement

• Businesses with yearly sales under CHF 100,000 are not required to register, but they are welcome to do so.
• Specific sectors are free from VAT, including healthcare, education, and insurance.

Important: Foreign businesses that make sales in Switzerland are subject to special regulations. To meet their VAT requirements, they frequently need to designate a tax representative in Switzerland. Learn more from the Swiss Federal Tax Administration (FTA).

2. What are the Swiss VAT rates?

 Three VAT rates apply in Switzerland:

• Standard rate: 8.1% for most goods and services.
• Rate reduction: 2.6% for newspapers, books, food, and medications.
• Special rate: 3.8% for accommodation services (e.g. hotels).

The most recent change to these rates was made on January 1, 2024. Businesses must ensure that the current VAT rates are accurately reflected in their accounting systems and invoices.

3. How is the VAT settled?

Businesses are required to submit regular VAT reports to the Federal Tax Administration (FTA) of Switzerland. This can be done in two ways:

An efficient way to bill

• Businesses can deduct input tax on purchases and charge VAT on all sales.
• Quarterly settlements are made.
• For businesses with significant input tax deductions, this approach is especially appropriate.

The flat-rate or balanced tax rate approach

• Businesses use a reduced, industry-specific percentage to calculate their VAT on turnover.
• There is no deduction for input taxes.
• Ideal for tiny businesses with minimal overhead costs.

Careful thought is advised, as the technique selection may impact the tax burden.

Important: A new accounting method took effect on January 1, 2025. Instead of settling quarterly or monthly as was previously the case, enterprises having an annual turnover of up to CHF 5,005,000 can now submit a yearly VAT return upon request.

4. Input tax deduction: a way for businesses to reduce VAT

VAT paid on purchases may be claimed as input tax by businesses. Consequently, the state only receives the difference between the VAT paid and received.

Input tax examples that are deductible include:

• VAT on the procurement of goods and materials
• VAT on running expenses, including IT, marketing, and rent
• VAT on machines and investments

Any deduction requires accurate bookkeeping and invoices that contain the required information.

5. VAT reimbursement for travellers and businesses 

Under certain circumstances, foreign visitors and businesses may be eligible for a VAT refund.

 VAT reimbursement for businesses

• If foreign businesses are exempt from VAT, they can recoup the VAT they paid in Switzerland.
• The last date for applying is June 30 of the subsequent year.

Tourists’ VAT rebate           

• VAT can be recovered by private customers who live outside of Switzerland and shop at Swiss establishments.
• Prerequisite: The purchase price must be more than CHF 300, and the goods must be shipped.

Learn more: Global Blue Switzerland.

6. Preventing errors – typical VAT issues

 High fines and extra payments may result from mistakes made in VAT accounting.

 Common errors:

• Invoices with incorrect VAT rates can cause issues during tax audits.
• Unreported sales may result in more interest and claims.
• Deadlines missed could result in default interest and penalties.

7. Companies should be aware of deadlines and penalties

  Crucial due dates:

• Depending on the procedure, the VAT settlement must be submitted either quarterly or annually.
• Within 60 days of settlement, the VAT must be paid.
• Refund requests for input taxes must be submitted by June 30 of the subsequent year.

  Penalties for infractions:

• Interest on the tax due is a consequence of a late settlement.
• Inaccurate or missing information could result in significant fines and additional payments.

8. Final Thoughts: How to Maintain Your

Worry-free VAT settling

Avoiding legal issues and financial disadvantages requires proper VAT processing. In the face of uncertainty, businesses should always seek professional assistance and maintain accurate and up-to-date accounting records.

If you have any questions, please do not hesitate to contact us.