VAT is a tax on consumption and an important source of revenue for the state. It is paid by consumers but levied on businesses.
The price that customers pay for goods and services already includes value-added tax. The business selling the goods or providing the service collects the VAT and gives it to the state.
If a business has to buy other products or services (inputs) in order to produce their own goods or provide their own services, it can deduct the VAT paid for them from the VAT it has received from its customers and has to send to the state. This is called an input tax deduction.
The federal government levies value-added tax on the purchase of products and services. However, it does not tax all products at the same rate:
Summary of the tax rates
Businesses
Businesses with an annual turnover of more than CHF 100,000 must pay value added tax. They must register with the Federal Tax Administration and account for their sales annually. When they register, they are given a VAT number.
This also applies to companies based abroad if they provide services in Switzerland.
Organisers of events
Organisers of one-off sports, cultural or other events (e.g. village or street festivals) are required to charge VAT. This applies if they earn at least CHF 100,000 from the sale of food and drink, advertising, etc.
Clubs
Charitable institutions or non-profit associations that are run on a voluntary basis must register for VAT if they have a turnover of CHF 250,000 or more.
Businesses liable to VAT must register with the Federal Tax Administration. Businesses are guided through the application process online: the FTA clarifies whether the business has to pay VAT and the business must indicate how it intends to account for its VAT.
Small businesses, event organisers or associations can use a simplified flat-rate accounting system without having to show the VAT actually collected and the input tax deductions.
VAT invoicing is carried out electronically, usually on a half-yearly or quarterly basis. The Federal Tax Administration provides online accounting tools.
Businesses must indicate their VAT number on invoices. This is made up of the business identification number and the suffix MWST/TVA/IVA (= VAT in German, Italian, French). Every Swiss company has a business identification number. This UID can be requested online.
For businesses:
For consumers: