As a Swiss SME, when do I charge Swiss VAT?

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What is Swiss VAT?

Swiss Value added tax (VAT) is a general consumption tax levied by the federal government. Businesses in Switzerland are required to levy a VAT on their consumers for the goods and services they sell. 

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Who has to pay Swiss VAT?

Businesses headquartered in Switzerland have to apply for a Swiss VAT number if they fall under one of the following conditions: 

• For non-profit and charitable institutions that make at least CHF 150 000 of yearly revenue
• For business and public bodies that make at least CHF 100 000 of yearly revenue. The threshold of CHF100’000.- is a yearly revenue limit, which also includes revenues exonerated or out of scope of the VAT
• For organizations hosting a one-off sporting, cultural or festive event that makes at least CHF 100 000

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How do I apply for a Swiss VAT?

You can apply for a Swiss VAT number online. You need the following documents prepared:

• An extract from the commercial register and UID number.
• For legal forms such as sole proprietorships, simple partnerships, associations or foundations, you need a social security number. You can find this on your AHV/IV insurance card or your health insurance card.
• Sales forecast for the first financial year. For active business, the balance sheet and income statement for the last maximum of six financial years.
• Foreign companies: You will need the details of your tax representative to complete the registration process and fill out the power of attorney form.

The online registration is five pages long and can be accessed below..

Start online registration

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How much is Swiss VAT?

The standard rate is 7,7 %. Accommodation services like hotels and Airbnbs are subject to a rate of 3,7 % until the end of 2027.

A reduced rate of 2,5 % applies for certain categories:

• Foodstuffs (except alcoholic beverages) 
• Cattle, poultry, fish;
• Seeds, living plants, cut flowers;
• Grains;
• Animal feed and fertilizer;
• Medications;
• Newspapers, magazines, books and other printed products without advertising
• Electronic newspapers, magazines and books without advertising
• Services of radio and television companies

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Is there another reporting method?

The method described above is called the Effective Method of VAT calculation. Most companies use it to calculate and collect VAT. Under certain conditions, it is also possible to convene with the fiscal authorities to be submitted to a flat rate based on your industry. The amount of tax to be collected is then simply calculated on the basis of the revenue and the input tax is not part of the calculation. The VAT declaration must be calculated every six months with this method. 

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Do I add Swiss VAT on my invoice to a client based in the EU or abroad?  

If your client is based in the EU or abroad and your sale is considered an export, you cannot add Swiss VAT on your invoice. To sell goods in the UE and deduct the European VAT, which varies from one country to the other, you must register to the VAT in these countries. It is also possible to form a company in an EU country and use it as a platform for operations in EU territory. Nevertheless, thresholds apply per country and above a certain yearly revenue, a registration in the given country for the VAT must be done.

To avoid the hassle of opening a branch abroad or registering to the VAT, many companies chose to hire a fiscal representative, which is in essence a local organization representing foreign companies for taxable operations in the territory. Fees and commissions are due to the fiscal representative in exchange for the service.

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When do I pay my VAT to the Swiss government?

You can choose to report VAT monthly, quarterly or half-yearly. Most businesses choose to report yearly. 

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How do I pay my Swiss VAT to the Swiss government? 

You use the payment address below for the Federal Tax Administration FTA for your VAT payments or money transfers. 

PostFinance, Berne

PC 30-37-5

IBAN (International Bank Account Number) CH60 0900 0000 3000 0037 5

BIC (Bank Identifier Code): POFICHBEXXX

You need to specify your VAT number and payment reason under notifications. 

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How do I handle VAT for invoices paid in euros or other currencies? 

When getting an invoice paid in euros or other currencies, you need to convert the VAT portion into Swiss Francs using either the monthly average rate published by the Federal Tax Administration FTA or the daily exchange rate (sell). 

The exchange rates published by the FTA are available below:

• Daily exchange rates (daily update)
• Monthly average exchange rates (German version)

The exchange rate chosen by the taxpayer has to be kept for at least one tax period. A change is only possible at the beginning of a new tax period.