VAT liability criteria

In principle, all businesses are liable to VAT, regardless of their legal form. However, if the turnover from taxable goods and/or services is less than CHF 100,000 (CHF 150,000 for non-profit sporting and cultural associations as well as for charitable institutions) in a given year, the company is exempted from paying VAT.

But anyone who does not pay VAT also cannot benefit from the input tax deduction. There are also special limits on turnover as regards VAT liability that apply to local authorities and for tax on acquisitions.

It is also possible for businesses that are exempted from VAT to choose to be liable to it. This may be an advantage, for example, if the business’ competitiveness is hindered in relation to competitors who are liable to it since, as a VAT-exempted business, it is not entitled to deduct input tax and therefore must later include this advance charge in the retail price.

Entrepreneurs must pass on the VAT they invoice to their customers, but they can deduct the input tax from it before doing so.

The value added tax act is very detailed and also explains imports/exports, businesses’ own costs, etc.

In Switzerland, there are the following options for accounting for the VAT: actual method, net tax rate method and the fixed-rate method.