Value added tax (Switzerland)

Value added tax (VAT), known as Mehrwertsteuer (MwSt) in German, taxe sur la valeur ajoutée (TVA) in French, and imposta sul valore aggiunto (IVA) in Italian, is a consumption tax levied in Switzerland on most goods and services. It is a multi-stage tax, meaning that it is collected at each stage of the production and distribution chain, but only on the "value added" at that stage. The end consumer ultimately bears the full burden of the tax.

General Principles:

The Swiss VAT system is governed primarily by the Swiss Federal Law on Value Added Tax (MWSTG). Businesses registered for VAT act as tax collectors on behalf of the government. They charge VAT on their sales (output tax) and can deduct the VAT they have paid on their purchases (input tax). The difference between output tax and input tax is remitted to the Federal Tax Administration (FTA).

Taxable Transactions:

VAT applies to:

• Supplies of goods and services made in Switzerland by VAT-registered businesses.
• Importation of goods into Switzerland.
• Acquisition of certain services from abroad.

Exemptions:

Certain goods and services are exempt from VAT, including:

• Healthcare services provided by hospitals, doctors, and other medical professionals.
• Education services provided by public schools and certain private institutions.
• Social security and welfare services.
• Cultural services provided by museums, theaters, and orchestras (subject to certain conditions).
• Financial services, such as banking and insurance (these are generally subject to other taxes).
• Rental of residential property.

VAT Rates:

Switzerland has several VAT rates:

• Standard rate: The standard VAT rate is currently 7.7%. This rate applies to most goods and services.
• Reduced rate: A reduced rate of 2.5% applies to essential goods, such as food, non-alcoholic beverages, newspapers, magazines, and books.
• Special rate for accommodation: A special rate of 3.7% applies to accommodation services.

Registration:

Businesses are required to register for VAT if their taxable turnover exceeds CHF 100,000 per year. Businesses with lower turnover can voluntarily register for VAT. Non-profit, volunteer-run sports and cultural associations, as well as non-profit organisations, with a turnover of less than CHF 250,000 are exempt.

Administration:

The Federal Tax Administration (FTA) is responsible for the administration of VAT in Switzerland. Businesses must file VAT returns and pay any VAT due on a quarterly or monthly basis, depending on their turnover.