Swiss VAT in 2021: rates, payment arrangements and exemptions

Basis and applicable rates

Calculate VAT

Since 1 January 2018, there have been three main rates applicable in Switzerland:

• The standard VAT rate (7.7%) applies by default to any transaction involving the sale of goods or services – this is the most common of the three;

• The special VAT rate (3.7%) applies to all accommodation services, such as hotels, where stays include overnight accommodation;

• The reduced VAT rate (2.5%) applies in particular to essential goods such as water, food, healthcare and certain cultural goods (books, newspapers, magazines, etc.).

Details of these rates, which remain in force in 2021, are available in this PDF document.

Distance selling and e-commerce

Originally scheduled for 1 January 2021, the European e-commerce package aims to amend the VAT rules relating to distance selling and B2C e-commerce.

Although these measures have been postponed for six months and apply only to European Union countries, Switzerland is likely to be affected in two ways:

• The tax exemption that previously applied to consignments worth less than €22 will be abolished. In other words, many low-cost items will now be subject to VAT. It will therefore be necessary to declare and pay the import tax electronically.

• The reform also aims to simplify VAT rules for online commerce. E-commerce platforms such as Amazon will therefore be required to pay VAT on behalf of the seller using their platform (where the value of the goods sold is less than €150).

Swiss companies would therefore be well advised to start preparing now, so that they can properly anticipate these international changes.

VAT regulations

Swiss companies

Following the major reforms of 2010, Swiss VAT applies at every stage of a company’s production and distribution processes. To voluntarily declare Swiss VAT, the company must complete a specific form.

To do this, you will need your VAT number, which is based on the Business Identification Number (BIN) listed in the register of the same name.

There are two methods of paying VAT:

• The agreed services (based on invoices). This is the most common method;

• Services received (based on payments and receipts). This method is recommended for small businesses that do not keep accounts.

We should also mention a complementary method that simplifies tax calculations: the net tax liability method and the flat-rate method.

Customs and foreign companies

Companies with their registered office abroad but operating in Switzerland are taxed in the same way as local companies.

All imports into Switzerland from abroad are subject to customs duties and VAT. For this reason, consignments must be declared to the customs authorities (in the case of postal items, this declaration is handled by the service provider).

Where the value of goods imported by a foreign company exceeds 10,000 Swiss francs, the standard VAT rate applies, which is 7.7%.

Collecting agencies

Article 130 of the Federal Constitution stipulates that VAT revenue is paid to the Swiss Confederation via two bodies:

• the Federal Tax Administration (FTA) with regard to domestic trade in Switzerland;
• the Federal Customs Administration (FCA) with regard to the importation of goods and services.

Cases where VAT is exempt

Corporate purpose

In 2021, and for several years now, cases of exemption have been rare in Switzerland.

Regardless of its legal status, any business is liable for VAT provided that:

• that she is self-employed in a professional or commercial capacity;
• that it aims to generate revenue on a permanent basis;
• that it acts in its own name in dealings with third parties (whether natural or legal persons).

Only certain business activities qualify a company for VAT exemption, such as:

• non-profit sport and culture;
• medical treatment goods and services;
• training services;
• self-employed farming;
• freelance visual art.

Voluntary organisations and public-benefit institutions with a turnover below the threshold of CHF 150,000 are also exempt from VAT. You can find the full list of exempt sectors in Article 23 of the VAT Act.

The businesses exempt from VAT are those whose services are not subject to tax by the Swiss government.

Other grounds for removal

A company with a turnover not exceeding CHF 100,000 is also exempt from VAT registration, regardless of whether it is a domestic or foreign company.

The following are grounds for expulsion:

• liquidation of a business’s assets;
• conclusion of the liquidation proceedings;
• cessation of business;
• turnover is once again below the relevant threshold.

Where any of these circumstances arise, a request for deregistration must be submitted to the FTA within 60 days of the end of the tax period. However, once a business exceeds the specified thresholds, it is required to resubmit the VAT registration form.

You now have all the information you need regarding VAT rates, exemptions and scope to import and export goods to and from Switzerland in the most efficient way.