Content - Value Added Tax
Value Added Tax
What is Value Added Tax?
Value Added Tax (VAT) is a consumption tax levied on domestic consumption. VAT is not imposed directly on the individual consumer but owed by the producers, manufacturers, tradesmen, retailers and service providers supplying goods and/or services to the consumer.
If you meet the requirements for VAT liability, you must get in touch with the Swiss Federal Tax Administration. VAT is thus also referred to as a self-declaratory tax.
Contact point for VAT questions
The Swiss Federal Tax Administration is responsible for levying VAT on taxable domestic turnover as well as on the acquisition of services rendered by companies domiciled abroad.
The Swiss Federal Customs Administration is, inter alia, responsible for levying tax on the import of goods.
Swiss Federal Tax Administration: opening hours and contact information
Monday to Friday 08:30 - 11:30 and 13:30 - 16:30
There are two regional contact desks for the Canton of Zurich:
Company identification number replaces former VAT number
The law on a company identification number entered into force on 1 January 2011. As a consequence of this law, a consistent identification number is attributed to every company in Switzerland.
The registration in the official register of company identification numbers (UID-Register) of the Federal Statistical Office is free of charge.
Effective 1 January 2014, the company identification number will have definitely replaced the former VAT number. Although the 6-digit VAT number can be used until then, the Swiss Federal Tax Administration recommends companies to start using the company identification number forthwith, with the added reference: VAT. However, registration in the UID-Register does not mean that a VAT number is thus applied for automatically. This number needs to be obtained separately.
Additional note concerning company identification number
Please note that although the new company identification number is abbreviated as UID (Unternehmens-Identifikationsnummer) in German, it is not the same as the VAT identification number used for VAT purposes within the EU, of which the German abbreviation also happens to be UID.
You are considered a VAT taxpayer if you carry out a self-employed commercial and professional activity, irrespective of whether or not the intention is to make a profit. The following non-exhaustive list provides an overview of VAT-liable entities:
- owners of sole proprietorships
- simple partnerships (e.g. work or craftsmen groups, consortiums)
- general partnerships and limited partnerships
- legal persons, such as AG (plc, corp.), GmbH (L.L.C.), cooperatives
- administrative offices and other agencies of the public sector
- associations and clubs
- non-profit institutions
- foreign companies provided they generate taxable income in Switzerland
With the new VAT law (nMWSTG) which entered into force on 01. 01. 2010, the threshold for compulsory tax liability has been increased to CHF 100’000 (Art. 10 para. 2 lit. a nMWSTG).
Tax-exempt are: companies with a domestic turnover of < CHF 100'000; non-profit, voluntarily managed sports and cultural clubs or charitable organisations with a domestic turnover of < CHF 150'000; companies with their place of business abroad that provide services which are exclusively subject to the acquisition tax.
Taxable entities that do not achieve the foregoing turnover thresholds, but wish to become VAT liable, are requested to contact the Swiss Federal Tax Administration. Pursuant to Art. 14 nMWSTG, tax liability commences with the initiation of the business activity.
Turnovers subject to VAT
Value Added Tax is levied on:
- supplying of goods in Switzerland and Liechtenstein
- supplying of goods in Switzerland and Liechtenstein through companies domiciled abroad (provided these are not registered in the VAT register and provided the supplying of goods is not subject to the import tax); the recipient of such a supply is tax liable (can also be a private person)
- services rendered in Switzerland and Liechtenstein
- import of services from abroad (provided > CHF 10'000 and provided the place at which the service is rendered is in Switzerland or Liechtenstein).
Turnovers not subject to VAT
Value Added Tax is not levied on:
- turnovers in the health sector
- turnovers in the educational and further education sector
- turnovers in the social welfare and social benefits sector
- turnovers in the insurance sector
- turnovers from monetary and capital transactions
Please note that this list is not exhaustive.
Principle (Art. 18 para. 1)
Domestic tax shall be levied on supplies made by taxable persons on Swiss territory for consideration; they are taxable unless this Act provides otherwise. Exceptions are defined in Art. 18 para. 2 and Art. 21. For certain turnovers that are exempt pursuant to Art. 21 there is an "option" possibility in accordance with Art. 22.
Clarification of VAT liability and VAT registration
As soon as you meet the VAT-paying requirements you are required to register in writing and unprompted with the Swiss Federal Tax Administration in Berne within 30 days of meeting the VAT criteria.
In principle, any company can apply for VAT registration even if exempt from VAT liability. For information (in German) please consult the VAT relevant web pages of the Swiss Federal Tax Administration.
Both the VAT registration and the VAT questionnaire to check VAT liability can be completed online. However, the Swiss Federal Tax Administration recommends sending the documents with a legally binding signature by regular mail to the Swiss Federal Tax Administration.
The VAT number can be applied for prior to registration of an AG (corp./plc) or GmbH (L.L.C.) in the commercial register. However, the number will only become valid once the company is recorded in that register.
VAT and accounting
The booking and billing of VAT has become a key component of the accounting process. For this reason it is highly advisable to check if you meet the conditions for one of the simplified accounting variants (net tax rate method pursuant to Art 59 MWSTG, Art 37 MWST or reporting of tax on the basis of the consideration collected pursuant to Art. 44 para. 4 MWSTG, Art. 39 para. 2 MWSTG).
1. Effective or net tax rate method
In an effort to facilitate Value Added Tax filing, companies with a turnover of a maximum of CHF 5.02 million and a tax burden of maximum CHF 109'000 a year can file according to the net tax rate method. Filing must be done twice a year. The net tax rate or flat tax rate method offers a time-saving simplification of the filing process.
Under the effective method, VAT filing must occur on a quarterly basis.
The chosen filing method can be changed every year (in the case of net tax rate to effective), or rather, every 3 years (in the case of effective to net tax rate).
As soon as the foregoing points have been clarified and a decision made regarding a suitable form of VAT filing, the VAT codes for output and input tax can be defined and linked with the respective accounts of financial accounting.
2. Filing according to the agreed consideration or the consideration collected
There are no obvious advantages or disadvantages between these two forms of filing. The decision depends on the type and size of business. When filing according to the agreed consideration, the supplying of goods and/or services is taxed in the filing period in which the invoice is issued. This is also the form of filing prescribed by law.
However, the taxpayer can apply for filing by the consideration collected. In this case, it is advisable to keep accounts of payments pursuant to the consideration collected. Supplying of goods and/or services is taxed in the filing period in which the consideration is collected.
This web page was created in cooperation with the Zurich section of the Swiss Fiduciary Association and the Swiss Federal Tax Administration.