The threshold
Anyone who generates less than CHF 100,000 a year in turnover from taxable supplies in Switzerland and abroad is exempt from tax liability (Art. 10 para. 2 VAT Act). Above that, registration is mandatory.
The threshold is CHF 250,000 for non-profit sports or cultural associations run by volunteers and for charitable institutions.
What counts in the calculation
- Turnover from taxable supplies, in Switzerland and abroad.
- Tax-exempt supplies such as exports count too: they are taxable, just at a zero rate.
- Supplies excluded from the tax, such as certain healthcare or education services, do not count.
Once the threshold is crossed
The business must register in writing with the Swiss Federal Tax Administration within 30 days of becoming liable (Art. 66 VAT Act). Registration is done online through the FTA’s ePortal.
A new business does not wait for the end of the year. If its turnover over the first twelve months is likely to exceed the threshold, it is liable from the day it starts trading. The estimate must be reasonable and justifiable.
Registering voluntarily
A business below the threshold can waive the exemption and register of its own accord (Art. 11 VAT Act). It then charges VAT and in return recovers the VAT paid on its purchases and investments.
This often pays off when customers are VAT-registered themselves, since they recover the VAT charged. It also makes sense when the business invests heavily at the start. It rarely pays off when customers are private individuals: their price goes up by the full amount of VAT.
Once registered, you must record VAT amounts in your accounts and file a return for each period. The method, effective or net tax rate, is chosen at registration: it is worth preparing that choice.
To compare the two methods, read Swiss VAT return: effective method or net tax rate. Qompta supports both and prepares the return from your invoices.