Swiss VAT (MWST) explained

Value added tax (in Switzerland: Mehrwertsteuer, MWST) is a tax on the consumption of goods and services. It is ultimately paid by the end customer; businesses collect it and pass it on to the Federal Tax Administration (ESTV).

It is levied at every stage of the value chain. So that it does not pile up along the way, a business may deduct the VAT it has paid on its own purchases — the input tax — from the VAT on its sales. Only the difference goes to the ESTV.

Who has to register?

A business becomes liable for VAT once it generates at least CHF 100,000 in turnover from taxable supplies within a year. What counts is turnover in Switzerland and abroad. As soon as the threshold is reached — or it is clear from the start that it will be exceeded — the business must register with the ESTV.

Non-profit, volunteer-run sports and cultural associations and charitable institutions have a higher threshold of CHF 250,000.

Which rates apply?

Since 1 January 2024, three rates apply:

Until the end of 2023 the rates were 7.7 %, 2.5 % and 3.7 %. What counts is when the supply was made, not when it was invoiced — if you invoice a supply from 2023 today, you still use the old rates. The VAT calculator works out amounts at old and new rates in both directions.

Two terms are often confused: supplies excluded from tax, for example in healthcare, education or insurance, carry no VAT but do not entitle you to deduct input tax either. Supplies exempt from tax, mainly exports, also carry no VAT — but the input tax deduction remains.

How are returns filed?

Under the effective method, returns are usually filed quarterly; under the net tax rate method half-yearly. The return and payment are due within 60 days after the end of the period. As a rule, VAT is accounted for on agreed consideration, i.e. by invoice date; on collected consideration only with the ESTV’s approval.

Which method suits which business is covered in VAT methods compared.