Swiss VAT (MWST) explained
A short overview: what VAT is, who has to register and which rates apply in Switzerland today.
Value Added Tax (in Switzerland: Mehrwertsteuer, MWST) is an indirect tax on the consumption of goods and services. It is levied at every step of the value chain – hence the name. A business deducts the VAT it has paid on its own purchases (“input tax”) from the VAT it has charged on its sales and remits only the difference to the Federal Tax Administration (ESTV).
Who has to register?
In Switzerland, a business becomes liable for VAT once its taxable Swiss turnover exceeds CHF 100,000 per year. For non-profit and sports clubs the threshold is raised to CHF 250,000.
Which rates apply today?
Since 1 January 2024 three rates apply in Switzerland:
- Standard rate: 8.1 % – most goods and services.
- Reduced rate: 2.6 % – food, books, newspapers, medicines and other daily necessities.
- Special rate: 3.8 % – accommodation services (hotels).
The rates apply independently of the accounting method you choose.
How is VAT filed?
VAT-liable businesses file periodic returns with the ESTV – quarterly by default, half-yearly or annually for small businesses. The return and payment are due within 60 days after the period ends.
Which accounting method fits your business – effective, net tax rate or flat tax rate – we cover in the next article: VAT methods compared.