The VAT that a recipient in Switzerland must declare itself when it buys services from a foreign business that is not registered for Swiss VAT. The tax liability shifts from the supplier to the recipient (the EU calls this reverse charge).
What it covers: mainly services such as consulting, advertising, software licences, IT and legal services. A few special cases also apply: work on Swiss real estate by a foreign business, supplies of electricity and gas, and (since 2025) emission certificates.
Who declares it:
Rate (2026): usually 8.1% (standard rate) on the invoiced amount, converted into francs.
What it changes in practice:
Example: a fiduciary buys CHF 2,000 of consulting from a German firm, with no Swiss VAT on the invoice: CHF 162 of acquisition tax. Effective method: CHF 162 declared and deducted. Net tax rate method: CHF 162 of cost.
Good to know: if the supplier is listed in the UID register (uid.admin.ch) and charges Swiss VAT, no acquisition tax is due.
Known in French as impôt sur les acquisitions and in German as Bezugsteuer.
A simplified VAT method reserved for public bodies and related institutions, including associations and foundations: a flat tax rate set per activity is applied to turnover, instead of deducting input VAT separately. Organisations that want to use it must notify the ESTV in writing.
It works like the net tax rate method, but is open only to these organisations, and with no turnover limit. Revenue must be booked separately for each approved flat tax rate, and invoices still show the statutory VAT rate, not the flat tax rate. Returns are filed quarterly, or annually with instalments, on application and subject to conditions.
Conditions (2025): a switch to the effective method is only possible after one full tax period. On switching to the flat tax rate method, input VAT previously deducted must be repaid, based on residual value. Group taxation is not available.
Known in French as the méthode des taux forfaitaires and in German as the Pauschalsteuersatzmethode. Not to be confused with the UK Flat Rate Scheme, whose closest Swiss equivalent is the net tax rate method.
The standard method of calculating Swiss VAT: the business applies the statutory rates to its taxable turnover and deducts the input VAT charged on its purchases and investments.
It is the only method that recovers input VAT at its exact amount. Every deductible purchase must therefore be backed by a compliant invoice and booked with its VAT amount.
Filing frequency (2025): returns are filed quarterly. Since 1 January 2025, businesses with annual turnover of no more than CHF 5,005,000 can opt for an annual return, with three instalments during the year.
The alternative is the net tax rate method, which trades this precision for simplicity. The effective method usually suits businesses whose input VAT is high relative to turnover, for example because of large investments or purchases of goods.
It is independent of the reporting basis: a business on the effective method reports on either agreed or received consideration.
Known in French as the méthode effective and in German as the effektive Abrechnungsmethode.
Every Swiss VAT return rests on two independent choices: when VAT is declared (the reporting basis) and how the amount owed is calculated (the reporting method).
1. When: the reporting basis
2. How much: the reporting method
Any reporting basis can be combined with any method. For example, a consultancy might report on received consideration under the net tax rate method, while a business with large purchases or investments usually stays on the effective method.
In practice, the reporting basis decides which documents drive the return: invoices issued and received, or payments received and made, as they appear on bank statements. The method decides whether input VAT has to be tracked invoice by invoice.
In French: mode de décompte and méthode de décompte. In German: Abrechnungsart and Abrechnungsmethode.
A Swiss federal tax levied at source on investment income, principally dividends, bond interest and bank interest, as well as on lottery winnings and certain insurance benefits.
Rates: 35% on investment income and lottery winnings, 15% on life annuities and pensions, 8% on other insurance benefits.
Its purpose is to discourage undeclared income: a Swiss taxpayer who declares the income properly reclaims the tax in full, through the cantonal tax return for individuals or directly from the ESTV for companies. It therefore functions as a security deposit rather than a final charge. Residents abroad may reclaim part of it under a double taxation treaty.
Known in German as Verrechnungssteuer and in French as impôt anticipé. It is a different tax from source tax on salaries (Quellensteuer, impôt à la source), though English often renders both as withholding tax.
A simplified VAT method, available on application to the ESTV, under which a fixed industry rate is applied to gross turnover instead of deducting input VAT separately.
Conditions: annual turnover from taxable supplies of no more than CHF 5,024,000 including VAT, and tax due of no more than CHF 108,000 a year. Because of the tax limit, the turnover ceiling is lower for the higher rates, for example about CHF 1.59 million at 6.8%.
There are ten rates, set by sector, from 0.1% to 6.8% (2026). Each is set to approximate the input VAT a typical business in that sector would reclaim. Returns are filed semi-annually rather than quarterly, which is the main administrative saving.
Invoices still show the statutory rate of 8.1%, not the net tax rate. Known in French as the méthode des taux de la dette fiscale nette and in German as the Saldosteuersatzmethode. It should not be confused with the flat tax rate method (Pauschalsteuersatz), which is reserved for public bodies and related institutions, including associations and foundations.
Comparable abroad: the UK Flat Rate Scheme, which also applies a sector percentage to VAT-inclusive turnover instead of reclaiming input VAT. Despite the similar name, it does not correspond to the Swiss flat tax rate method.
An alternative VAT reporting basis, granted by the ESTV on application: VAT is declared for the period in which payment is actually received.
The advantage is cash flow. No VAT falls due on an invoice until the customer has paid, so a business never advances the tax on unpaid invoices. This suits businesses that grant long payment terms or often face late payment. The counterpart is that input VAT can only be deducted once the supplier's invoice has been paid.
Like agreed consideration, it can be combined with any of the reporting methods (effective, net tax rate, flat tax rate).
Also known as: the received consideration method. The official English translation of the Swiss VAT law uses collected consideration. Comparable term elsewhere: cash basis. The Swiss term refers only to when VAT is declared, not to how the books are kept.
Known in French as contre-prestations reçues, and in German as vereinnahmte Entgelte.
The default VAT reporting basis in Switzerland: VAT is declared for the period in which the invoice is issued, regardless of when the customer pays.
The practical consequence is that a business owes the VAT on an invoice before the money arrives, and carries it until the customer settles. Input VAT follows the same logic: it is deducted for the period in which the supplier's invoice is received, not when it is paid.
This reporting basis can be combined with any of the reporting methods (effective, net tax rate, flat tax rate).
Also known as: the agreed consideration method. Comparable terms elsewhere: accrual basis or invoice basis. The Swiss term refers only to when VAT is declared, not to how the books are kept.
Known in French as contre-prestations convenues, and in German as vereinbarte Entgelte.
The right of a VAT-registered business to deduct the VAT it paid on business purchases from the VAT it collected on its sales, so that only the difference is paid to the ESTV.
This is what makes VAT a tax on final consumption rather than a cost at every stage of the chain. A business buying CHF 10,000 of supplies plus CHF 810 of VAT can set that CHF 810 against the VAT it owes.
Input VAT can only be deducted where the purchase serves the taxable business activity, and where a compliant invoice shows the supplier's VAT number and the tax amount. Businesses using the net tax rate method do not deduct input VAT separately, since the net tax rate already accounts for it.
The Swiss consumption tax, levied on most goods and services. Known as MWST in German and TVA in French.
Rates since 1 January 2024:
Registration becomes compulsory once worldwide taxable turnover reaches CHF 100,000 a year. Below that, a business may register voluntarily, which can be worthwhile when it incurs significant input VAT.
VAT is a tax on the end consumer: a registered business collects it on its sales, deducts the VAT it paid on its purchases, and pays the difference to the ESTV.
Returns are filed quarterly under the effective method and semi-annually under the net tax rate method, each within 60 days of the end of the period. Since 1 January 2025, smaller businesses may opt for an annual return with instalments.
Tax withheld directly from salary by the employer and paid to the tax authority, instead of the employee filing an ordinary tax return.
In Switzerland it applies mainly to foreign workers without a C permit, and to cross-border commuters. The employer is responsible for deducting the right amount, using the scale of the canton concerned, and for paying it over.
Source tax should not be confused with withholding tax (impôt anticipé), which is levied on investment income and is a different tax entirely.
The mandatory contributions funding the Swiss social insurance system, levied on salaries and shared between employer and employee.
They cover the first pillar (AHV, IV, EO), unemployment insurance (ALV), occupational pensions (BVG), accident insurance (UVG) and family allowances. Some are split equally, others fall wholly on the employer.
For the employer they are not simply a deduction but an additional cost: the real cost of an employee is their gross salary plus the employer's share.
The share of social insurance contributions borne by the employer, on top of the gross salary paid to the employee.
For 2026 this includes AHV/IV/EO at 5.3%, ALV at 1.1% up to CHF 148,200, at least half of the BVG contribution, occupational accident insurance in full, and family allowance contributions, which vary by canton.
In total, employer contributions typically add somewhere between 15% and 20% on top of gross salary. That is the gap between what an employee costs and what their contract says.
The share of social insurance contributions deducted from the employee's gross salary.
For 2026 these are AHV/IV/EO at 5.3%, ALV at 1.1% up to CHF 148,200, at most half of the BVG contribution, and, depending on the employer, shares of daily-sickness and non-occupational accident insurance.
The employer withholds these amounts and pays them to the relevant funds together with its own share.
The payslip: the document an employer must give each employee setting out how their pay was calculated.
It shows gross salary and its components, each social contribution deducted with its rate, any source tax, and the resulting net amount. Employer contributions are often shown alongside for transparency, though they are not deducted from the employee.
Swiss law requires employers to provide a written statement of account for each pay period.
Occupational pension provision, the second pillar of the Swiss system. It supplements the first pillar so that together they maintain an accustomed standard of living in retirement.
Key figures (2026):
Contribution rates rise with age, from 7% of coordinated salary for younger employees to 18% for the oldest band. The employer must pay at least half.
The coordination deduction weighs disproportionately on part-time and low salaries, since it is subtracted in full regardless of workload.
Unemployment insurance, which provides income support to people who lose their job.
Rate (2026): 2.2% of gross salary, split equally between employer and employee at 1.1% each, on salary up to CHF 148,200 a year.
Unlike AHV, the contribution is capped: no contribution is due on salary above CHF 148,200.
Old-age and survivors' insurance, the first pillar of the Swiss social security system. Despite the English name, it covers old age and survivors; disability (IV/AI) and loss of earnings (EO/APG) are collected alongside it.
Rate (2026): 10.6% of gross salary for AHV, IV and EO combined, split equally between employer and employee at 5.3% each. There is no upper salary ceiling: the contribution applies to the whole salary.
Self-employed people pay their own contributions at a maximum of 10.0%, on a sliding scale for income below CHF 60,500.
Contributions are mandatory from the first franc of salary, and the employer is responsible for declaring and paying both shares to the compensation fund.
The first balance sheet of a company, drawn up when it is founded, showing its assets, liabilities and equity at that moment.
For a Swiss SA or Sàrl it records the capital contributed by the founders, whether in cash or in kind, and is a required part of the incorporation file.
It also sets the baseline against which every later financial statement is compared.
The official public record of companies and legal entities in Switzerland, maintained by each canton.
Registration gives a company legal personality and makes its key details public: legal form, registered office, purpose, share capital and the people authorised to sign on its behalf.
Companies such as an SA or Sàrl must register. Sole proprietorships only have to register once annual turnover exceeds CHF 100,000. Each registered entity holds a unique business identification number (IDE/UID), which also serves as its VAT number.
An independent professional who reviews and verifies a company's financial statements, giving an opinion that the accounts present a true picture.
Switzerland distinguishes two levels. An ordinary audit applies to companies that, in two successive financial years, exceed two of three thresholds: CHF 20 million total assets, CHF 40 million turnover, or 250 full-time employees on annual average. Everyone else falls under a limited audit, which is lighter in scope.
Companies with fewer than ten full-time employees on annual average may waive the audit entirely, with the agreement of all shareholders. This is known as opting out and is common among Swiss SMEs. Conversely, shareholders representing at least 10% of share capital can demand an ordinary audit, known as opting up.
Associations are subject to lower thresholds for an ordinary audit: CHF 10 million total assets, CHF 20 million turnover, or 50 full-time employees on annual average.
The year-end financial statements that present a company's financial position and performance.
Under Swiss law they comprise three parts:
Larger companies must add a cash flow statement and a management report. The accounts are approved by the shareholders' meeting and form the starting point for the tax return.
The legal requirement to keep financial records and prepare accounts.
In Switzerland the obligation is set by the Code of Obligations and scales with size. Sole proprietorships and partnerships with annual turnover below CHF 500,000 keep simplified accounts (income, expenses and asset position), often called comptabilité simplifiée. Above that threshold, and for all companies entered in the commercial register such as an SA or Sàrl, full double-entry accounting with annual accounts is required.
Accounting records must be kept for ten years.
A Swiss IBAN variant used exclusively for payments with the Swiss QR-bill. It is linked to a dedicated collection account and used with a structured QR reference, which lets the recipient reconcile incoming payments automatically.
Format: same structure as a Swiss IBAN, but the bank identifier (QR-IID) falls within the reserved range 30000-31999.
Example: CH44 3199 9123 0008 8901 2.
A QR-IBAN cannot be used for standard or international transfers, only for QR-bill payments.
Note: the spaces in a QR-IBAN are for readability only. In payment files and online forms it is written without them: CH4431999123000889012.
