Value Added Tax (VAT), known in Switzerland as Mehrwertsteuer (MWST), is a federal consumption tax that applies to most goods and services. It is one of the most important sources of revenue for the Swiss Confederation. This guide outlines the structure of Swiss VAT, explains cross-border rules, and highlights compliance issues relevant for domestic and foreign businesses.

Swiss Value Added Tax (VAT / MWST) System

The Swiss VAT system is a broad-based consumption tax levied on domestic supplies, imports, and selected services. It follows principles similar to the EU VAT but is designed under Swiss federal law. Businesses charge VAT on taxable supplies (output tax) and can usually reclaim input VAT.

Basic Structure of the Swiss VAT System

VAT in Switzerland is regulated by the Swiss Federal VAT Act (MWSTG). It applies to most goods and services supplied domestically, as well as imports. Certain transactions are exempt or subject to special rules.

VAT Rates

• Standard rate: 7.7% (applies to most goods and services)
• Reduced rate: 2.5% (e.g., food, books, medicines)
• Special rate: 3.7% (hotel and accommodation services)
• Exemptions: e.g., medical care, education, financial services, real estate transactions

Input Tax Deduction

Registered businesses can deduct the VAT they pay on purchases (input tax) from the VAT they owe on sales (output tax). This ensures VAT is borne by the final consumer. Partial exemptions apply where activities include VAT-exempt supplies (e.g., banks, insurance).

Cross-Border Transactions

Imports into Switzerland

Goods imported into Switzerland are subject to import VAT, collected by Swiss customs. Import VAT is deductible as input tax if the importer is VAT-registered. Customs duties may also apply depending on the goods.

Exports from Switzerland

Exports of goods and many international services are zero-rated. Exporters must retain proper proof that goods left Switzerland in order to apply the zero rate.

Services (B2B / B2C)

• B2B services: Place of supply is generally where the customer is established. If the customer is abroad, no Swiss VAT is charged.
• B2C services: Many services to private individuals (e.g., digital services) are taxable where the consumer is located; foreign providers may need Swiss VAT registration.

Compliance & Practical Considerations

Registration & Filing

Businesses with annual turnover exceeding CHF 100,000 from taxable supplies must register for Swiss VAT. Foreign companies supplying taxable services into Switzerland may also be obliged to register. Returns are filed quarterly or semi-annually.

Invoicing & Documentation

Invoices must include VAT number, applicable rate, and amount of VAT charged. Proper records are essential for input tax deduction and audit purposes.

Professional Guidance

Given the complexity of Swiss VAT rules, especially in cross-border contexts, businesses should seek advice from VAT specialists to ensure compliance and to optimize input tax recovery.