What is VAT?
The MWST is an indirect tax paid by consumers, but must be collected by the company and paid to the Federal Tax Administration (ESTV). It is incurred at every stage of value creation, which is why it is also known as value added tax: companies pay MWST on their purchases (input tax) and collect it at the same time on their sales (output tax).
Who needs to register for VAT?
The MWST obligation depends on the annual turnover:
Companies with a turnover of at least CHF 100’000 must register with the ESTV and settle their MWST.
Companies with a lower turnover are generally exempt, but can register voluntarily in order to, for example, claim input tax.
Exception: Non-profit organizations or certain professional groups (e.g. in the healthcare sector) may also be exempt depending on their activity.
The three VAT rates
In Switzerland, there are the following MWST rates:
Standard rate of 8.1% for services, consumer goods and consultations
Reduced rate of 2.6% for food, medicine and books
Special rate of 3.8% for accommodation services (e.g. hotel overnight stays)
Input tax deduction: A key principle
The input tax deduction allows companies to offset the MWST they have paid themselves when making purchases (e.g. for materials, services) against the MWST they invoice their customers. Only the difference – the value added – is taxed. The prerequisite for claiming the input tax deduction is that the services purchased must serve business purposes.
Two billing methods
Companies can choose between two MWST accounting models:
Effective method:
Net tax rate method:
This you must observe
After registration, the following obligations apply:
Regular billing of the MWST (quarterly or semi-annually)
Issue invoices correctly, including MWST number, tax rate and amount
If required: Collaboration with a fiduciary office or use of software (such as bexio)
Conclusion: Duty and opportunity at the same time
The MWST is a challenge for many SMEs, but can also offer advantages – especially through input tax deduction. Good organization and the right accounting model help to keep the effort within limits and avoid errors.
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