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.
