01When Am I Subject to VAT?
In Switzerland, there is a clear threshold: anyone whose self-employed activity generates worldwide annual revenue of CHF 100,000 or more is mandatorily subject to VAT. This regulation is enshrined in the Federal Act on Value Added Tax (VATA).
The threshold refers not to profit but to revenue -- i.e. the sum of all income from taxable services. Whether you make a profit or a loss at the end of the year is irrelevant for the VAT obligation.
The obligation applies from the moment it becomes foreseeable that you will exceed CHF 100,000 within 12 months. You do not have to wait until the end of the year -- if, for example, you already have CHF 70,000 in revenue by June and the trend is clear, you must register.
02What Counts as Revenue?
For assessing the CHF 100,000 threshold, the worldwide annual revenue from taxable services is considered. This encompasses more than you might think:
- All services and deliveries that you provide in Switzerland or from within Switzerland
- Revenue from foreign clients -- even if the service is provided abroad, it counts towards the threshold
- Tax-exempt revenue (e.g. exports) -- these count towards the relevant turnover even though no VAT is charged on them
- Exempt services (e.g. health services, education under Art. 21 VATA) -- these also count
Purely private income (e.g. selling personal items on Ricardo) or capital gains from asset management do not count towards the relevant revenue.
03Registration Within 30 Days
Once you exceed the CHF 100,000 threshold (or it is foreseeable that you will), you must register with the Federal Tax Administration (FTA) within 30 days. Registration is done online via the FTA portal.
During registration, you also choose your accounting method:
- Effective method: You settle the actual VAT collected and deduct the input tax paid. Filing is quarterly.
- Flat tax rate method: You pay a flat, industry-specific rate on your gross revenue. Filing is semi-annually. Learn more in the article on the flat tax rate method. (Requirement: revenue under CHF 5.02 million)
Voluntary VAT registration is possible at any time -- even if your revenue is below CHF 100,000. This can make sense if you are making major investments and want to reclaim the input tax, or if your clients are mainly businesses (B2B) that deduct input tax themselves.
04VAT Rates at a Glance
Since 1 January 2024, the following VAT rates apply in Switzerland. These were adjusted as part of the OASI supplementary financing:
| Rate | Percentage | Applies to |
|---|---|---|
| Standard rate | 8.1% | Most goods and services |
| Reduced rate | 2.6% | Food, medication, newspapers, books |
| Special accommodation rate | 3.8% | Hotel overnight stays incl. breakfast |
As a self-employed service provider, you will charge the standard rate of 8.1% in most cases. You may only apply the reduced rate if your service is explicitly listed among the eligible goods.
Example: Invoice with VAT -- Web design fee: CHF 5,000.00, VAT 8.1%: CHF 405.00, Total incl. VAT: CHF 5,405.00.
05What Changes After Registration?
Once you are subject to VAT, several things change in your day-to-day business -- including the requirement to regularly file a VAT return with the FTA. The key points:
- Invoices with VAT. You must show VAT separately on all invoices -- with tax rate and tax amount. Your UID number (Business Identification Number with VAT suffix) must also appear on every invoice.
- Input tax deduction. From now on, you can claim the VAT you pay yourself (e.g. on software subscriptions, office supplies, business rent) as input tax -- provided you choose the effective method.
- Regular filing. Depending on the method, you must file a VAT return with the FTA quarterly (effective) or semi-annually (flat rate) and transfer the amount owed.
- Extended bookkeeping obligation. You must record your income and expenses in a way that allows VAT to be calculated correctly at all times. All receipts must be retained.