VAT and Sales Tax in Switzerland

Switzerland levies value added tax under the federal Mehrwertsteuergesetz (MWSTG) -- known as MWST in German, TVA in French, and IVA in Italian. The Federal Tax Administration (ESTV/AFC) administers the tax. As of 1 January 2024, Switzerland applies three separate rates, all raised slightly to fund the AHV-21 state-pension reform approved by Swiss voters on 25 September 2022 with a 55.07% majority. Even after the 2024 increase, the Swiss standard rate of 8.1% remains the lowest in Europe by a wide margin -- Germany charges 19%, Luxembourg 17%, and most other European Union member states fall between 20% and 27%.

For the Switzerland country overview see the dedicated page. Questions about which rate applies to a specific transaction, or how to structure MWST accounting for a particular business type, are best addressed by a qualified tax professional.

What are the three MWST rates and what do they cover?

The MWST operates at three rates effective 1 January 2024. The standard rate of 8.1% (raised from 7.7%) applies to most commercial supplies of goods and services not listed under a reduced category. The reduced rate of 2.6% (raised from 2.5%) covers everyday necessities enumerated in MWSTG Article 25, including foodstuffs and non-alcoholic beverages subject to the Federal Foodstuffs Act, drinking water, human and veterinary medicines, books (print and electronic), newspapers and magazines without advertising character, seeds, plants and cut flowers, animal feed and fertilisers, services of public radio and television companies, and -- from 1 January 2025 -- menstrual hygiene products. The special accommodation rate of 3.8% (raised from 3.7%) applies exclusively to hotel and short-term lodging services, including bed-and-breakfast, camping, and qualifying holiday accommodation, but not to food and beverage services at those establishments, which fall under the standard rate.

The applicable rate is determined by when the supply is delivered, not by the invoice date or payment date. Services delivered on or before 31 December 2023 were taxed at the previous rates; services delivered from 1 January 2024 onward attract the current rates [ESTV, "Current Swiss VAT rates", estv.admin.ch, 2024].

Zero-rating under MWSTG Article 23 covers exports, qualifying international transport, and supplies to certain international organisations. Exemptions under Article 21 (with no right to deduct input MWST) include residential rents, financial services, healthcare, and education.

Why were rates raised in 2024?

The MWST rate increase was not driven by a standard budget shortfall but by a targeted referendum outcome. Swiss voters on 25 September 2022 approved the AHV-21 reform package, which combined an increase to the retirement age for women (from 64 to 65, phased in to 2028) with a small MWST surcharge dedicated to shoring up the AHV federal pension fund. The 0.4-percentage-point increase in the standard rate generates approximately CHF 1.4 billion in additional federal revenue annually, ring-fenced for AHV financing. Because the rate change was constitutionally authorised via referendum, it required no separate parliamentary law to implement [KPMG Switzerland, "Swiss VAT Rate Increase 2024 & New E-filing Portal", kpmg.com, 2023]. Businesses were required to update their accounting systems and ERP configurations to reflect the new rates, applying the old rates to supplies delivered before 31 December 2023 and the new rates to all supplies from 1 January 2024 onward.

Who must register for MWST?

Mandatory registration applies once a business exceeds CHF 100,000 in worldwide annual turnover from taxable supplies or supplies exempt with credit -- this is the general threshold under MWSTG Article 10 [ESTV, "Tax liability VAT", estv.admin.ch, 2024]. The threshold is high by European standards; it applies to gross revenue before MWST across the entire calendar year. Worldwide turnover counts both Swiss-source and foreign-source supplies (including supplies that would be taxable had they been made in Switzerland).

Non-profit sporting and cultural associations, as well as charitable institutions, benefit from a higher threshold of CHF 250,000 in worldwide annual turnover before mandatory registration applies [ESTV, "Tax liability VAT", estv.admin.ch, 2024]. Note that this official ESTV threshold for these entity types is CHF 250,000, not the CHF 150,000 sometimes cited in secondary sources.

For new activities, mandatory registration begins immediately if circumstances indicate the CHF 100,000 threshold will be reached within the following twelve months -- meaning the obligation arises prospectively, not only after the threshold is exceeded. Voluntary registration below the threshold is permitted for any business supplying taxable goods or services in Switzerland and is often worthwhile when input MWST on purchases is substantial and the administrative cost is manageable. All registration filings go through the ESTV ePortal, which replaced the legacy ESTV SuisseTax platform in late 2022. Foreign businesses with Swiss-source taxable supplies above CHF 100,000 must also register, generally through a Swiss fiscal representative.

How does the Saldosteuersatz simplified method work?

Swiss MWST law under MWSTG Articles 37-38 offers small businesses an alternative to tracking every franc of input MWST through the standard effective accounting method. The Saldosteuersatz (German: balance-tax-rate; French: taux de la dette fiscale nette) applies a single industry-specific flat rate directly to gross turnover, and the result is the MWST owed -- no input MWST deduction calculation is required.

Eligibility requires that annual taxable turnover not exceed CHF 5,024,000 (the updated 2024 ceiling, raised from CHF 5,005,000) and that the MWST owed not exceed CHF 108,000 per year (raised from CHF 103,000) [Caminada Treuhand, "New VAT rates 2024", caminada.com, 2024]. The ESTV publishes industry-specific Saldosteuersatz rates ranging from 0.6% (for very-low-margin sectors with high inherent input MWST) to 7.5% (for sectors with minimal deductible inputs). For example, architects and engineers typically face rates around 5.9-6.2%, restaurants around 5.1-5.5%, and retail trade around 3.5-4.4%.

Under the Saldosteuersatz, businesses file MWST returns semi-annually rather than quarterly (with annual filing also available in some configurations), and the return must be submitted within 60 days of the period end. The election is binding for a minimum of one year and renews automatically; leaving the method triggers a three-year exclusion before re-election is permitted. The method suits businesses with stable, predictable turnover below the ceiling where the administrative simplification outweighs the loss of granular input MWST deductions.

How are MWST returns filed?

The standard filing frequency for Swiss MWST is quarterly, with each return due within 60 days of the quarter-end [KontoMatch, "MWST Explained: VAT for Swiss Freelancers and Small Businesses", kontomatch.com, 2024]. Businesses using the standard effective accounting method (Effektive Abrechnungsmethode) report actual input and output MWST separately on each return and settle the difference. Those using the Saldosteuersatz file semi-annually. From 1 January 2025, the ESTV mandates electronic filing through the ePortal for all MWST-registered businesses -- paper returns are no longer accepted.

Registered businesses receive a UID (Unternehmens-Identifikationsnummer, business identification number, formatted CHE-xxx.xxx.xxx) which must appear on all MWST invoices alongside the rate charged, the net amount, and the MWST amount. Invoices must be retained for ten years. Reclaim of excess input MWST (where deductible input exceeds output MWST in a period) is processed by the ESTV and returned to the registered taxpayer's account, typically within sixty days of the return filing.

For businesses with complex supply chains, mixed-rate portfolios, or significant cross-border activity, the interaction between registration thresholds, rate categories, the Saldosteuersatz eligibility ceiling, and the ESTV ePortal reporting obligations warrants professional review. A qualified tax professional familiar with Swiss MWST can confirm which rate applies to each supply type and whether the Saldosteuersatz is cost-effective for a given business profile.