Swiss VAT: when does a business have to register?
A Swiss business does not necessarily charge VAT from its very first customer. It all depends on its turnover, and on when it expects to cross the threshold.
VAT does not apply to every business. Depending on its turnover, a business may be exempt, or may have to register from day one. It comes down to one threshold and a question of timing.
What turnover triggers VAT registration?
A business becomes liable for VAT (assujettie à la TVA) once it generates at least CHF 100’000 of turnover a year. The figure is worldwide: what you invoice abroad counts too.
Not everything counts:
- included: supplies taxable in Switzerland, supplies made abroad that would be taxable here, and exempt supplies such as exports;
- not included: supplies outside the scope of VAT (medical care, education, renting out a home), donations and subsidies.
When does VAT liability start?
It depends on your starting point:
- A new business, the takeover of an existing one or the opening of a branch: from the start of trading, if the threshold is expected to be reached within twelve months.
- An established business that had stayed below the threshold: at the end of the financial year in which it reached it.
Either way, the business must notify the Federal Tax Administration (Administration fédérale des contributions, AFC/FTA) in writing, unprompted, within 30 days of becoming liable. Registration is done online; the FTA then issues a VAT number.
Does this apply to a foreign company?
Yes, as soon as it supplies goods or services in Switzerland and its worldwide turnover reaches the same CHF 100’000 threshold. It must then appoint a tax representative (représentant fiscal) living or based in Switzerland: without one, registration is not possible.
It remains exempt if the only supplies it makes in Switzerland are exempt ones, or ones subject to reverse-charge tax (impôt sur les acquisitions), where it is the customer in Switzerland who pays the VAT.
Can you register before reaching the threshold?
Yes. Any exempt business can waive its exemption and register voluntarily. Registration takes effect at the earliest from the start of the current tax period, and the choice applies for at least one period.
Whether it pays off has to be worked out case by case: registering lets you recover the VAT paid on your purchases, but makes your prices higher for private customers.
How we can help
We work out with you the turnover that counts, agree together on the right time to register, then prepare the registration and your VAT returns with you, as part of your bookkeeping.
A question about VAT for your business? Call us, or book a meeting.
+41 26 303 36 69