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.
