TAXES

The VAT is an indirect Tax and is collected by the confederation. As the name indicates, you pay tax on the added value. This is granted by the input-tax deduction. That means when you buy something for CHF 100.00 and resell it for CHF 150.00, you will only have to pay tax an the added value of CHF 50.00. The whole VAT will therefore be passed on to the end consumers.

Tax Liability

The ones who are obligated to pay VAT, are self-employees with a turnover that exceeds CHF 100'000.00. Who is self-employed and earns a turnover below CHF 100'000.00 does not have to pay VAT. He may however put himself volunteraly under the VAT liability. 

Companies with VAT liability are asked to apply themself at the "Eidgenössischen Steuerverwaltung" in Bern. They will receive, as far as not already available, their own VAT number (UID) and will be registered as VAT obligatory.

Net Tax Rate Method

As an entrepreneuryou can under some circumstances decide on your own if you want to calculate the VAT by the effective tax rate or if you want to use the net tax rate method.  The use of the net tax rate method is the simplification of the calculation of teh VAT with the Swiss internal revenue office. With this calculation-method you won't  have to calculate the input tax. The owed tax will be calculated with the multiplication of the gross turnover with the specific net tax rate. 

If the following conditions are fullfilled, you may calculate the VAT with the net tax rate method: 

• The annual Turnover (incl. Tax) must not exceed CHF 5.02 million 
• The owed Tax must not exceed CHF 109'000.00 annually. This will be calculated with the multiplication of the gross turnover and the sector-specific net tax rate.
• In the first year of the VAT liability or rather in the year before the change of the effective method to the net tax rate method the following annual turnovers must not be exceeded: 

- With use of the net tax rate of 0.1 %, 0.6 %,1.2 %, 2.0 %, max CHF 5.02 million

- With use of the net tax rate of 2.8 %, max CHF 3.76 million

- With use of the net tax rate of 3.5 %, max CHF 2.95 million

- With use of the net tax rate of 4.3 %, max CHF 2.48 million

- With use of the net tax rate of 5.1 %, max CHF 2.10 million

- With use of the net tax rate of 5.9 %, max CHF 1.79 million

- With use of the net tax rate of 6.5 %, max CHF 1.63 million

Service Import Tax

When a swiss customer obtains services from foreigners, then you won't owe the foreign VAT because the service-export of foreigners is freed from the VAT. So that the national service providers will not be at disadvantage, the foreign services will be charged with the service import tax. They also come to 7.7% and has to be payed by the ones that are obligated to the VAT.

Companies that use the effective method only need to report the service import tax and can directly subtract them as input tax. That isn't the case with the net tax method, because you can't deduct any input taxes, you owe the complete sum service import taxes. 

Personal Consumption

One speaks of personal consumption when objects that initially have been used for taxable or non-taxable turnovers, are used for an other purpose. In this case the input tax has to be corrected by the declaration of personal consumption according to article 31 of the VAT law. 

VAT for Properties

Following performances are zero-rated: 

• Transfer of estates
• Performances of condominium owners' association to the owner
• Handing over the estate for application or usage (rental) 

So that the landlord can still deduct the input tax, the performance has to be voluntarily obligated to the VAT and has to be included in the tenancy agreement. The input tax can also be deducted at a later point in time, but the input tax deduction will be anually reduced by 5%. 

The landlord can opt per rented object, that means when multiple rooms are rented out on a property, the opting can be done individually. Tenants don't have the right to equal treatment. When opting the net rent including running costs are included in the VAT. 

VAT Rates

For the most products and services the VAT rate is 7,7%. The reduzed VAT rate of 2,5% includes certain goods for daily needs like food, alcohol-free drinks, books, newspapers, magazines, drugs but also voluntarily taxed admissions for sport or cultural events. The spezial rate for hotelbookings including breakfast is 3,7%. This VAT rates are valid from the 1. January of 2018.

More information on the topic of VAT is available at:

https://www.ch.ch/de/mehrwertsteuer-mwst/