Swiss VAT basics 2026 for SMEs: rates, exemptions, non-consideration and input tax reduction

Swiss VAT is a consumption tax with input tax deduction: you charge 8.1%, 2.6% or 3.8% on your supplies and deduct the VAT on your purchases (Arts. 1 and 25 VAT Act). Not every payment is consideration. Subsidies, donations, dividends, damages and ten other flows are non-consideration under Art. 18(2) VAT Act: no VAT is due on them. For subsidies, however, you must reduce your input tax proportionally (Art. 33(2) VAT Act); for donations you do not.

Key points

• Three rates since 1 January 2024: 8.1% standard, 2.6% reduced, 3.8% accommodation (Art. 25 VAT Act).
• Any supply in Switzerland for consideration is taxable unless the Act provides an exception (Art. 18(1) VAT Act).
• Twelve money flows are not consideration because no supply is made, from subsidies to fees for sovereign activities (Art. 18(2)(a)–(l) VAT Act).
• Input tax reduction applies only to subsidies, tourist levies and fund contributions (Art. 33(2) VAT Act; Art. 75 VAT Ordinance, in German).
• Excluded supplies cost the input tax deduction (Arts. 21 and 29 VAT Act), exempt exports do not (Art. 23 VAT Act).
• Net tax rate method up to CHF 5,024,000 turnover and CHF 108,000 tax per year (Art. 37(1) VAT Act).
• Default is agreed consideration; received consideration on application (Art. 39 VAT Act).
• Limitation after 5 years, absolute after 10; keep records until absolute limitation (Arts. 42 and 70 VAT Act).

How VAT works

The Confederation levies VAT as a general consumption tax based on the system of net all-phase taxation with input tax deduction (Art. 1(1) VAT Act). Its aim is to tax non-business final consumption in Switzerland. Each business in the chain adds the tax to its prices and deducts the tax its suppliers invoiced. Economically, only the end customer bears the tax.

The system has three components: domestic tax on supplies in Switzerland, reverse-charge tax on services from foreign businesses, and import tax on goods (Art. 1(2) VAT Act). You can deduct all three as input tax, insofar as you use the purchases for your business activity (Art. 28(1) VAT Act).

Who must account for VAT

You become liable once you reach CHF 100,000 annual turnover, in Switzerland and abroad, from supplies that are not excluded (Art. 10(2)(a) VAT Act). For volunteer-run sports and cultural associations and charitable organisations the threshold is CHF 250,000 (Art. 10(2)(c) VAT Act). Non-consideration plays no role in whether you operate a business (Art. 10(1bis)(a) VAT Act). You register within 30 days of the start of liability (Art. 66(1) VAT Act). Threshold, start and voluntary registration are covered in From what turnover must a business register for VAT? (in German).

Supply and consideration

The Act defines a supply as granting a third party a consumable economic value in the expectation of consideration (Art. 3(c) VAT Act). Consideration is the value the recipient spends to obtain that supply (Art. 3(f) VAT Act). Without a link between payment and supply, there is no consideration. This is where non-consideration comes in.

VAT rates in 2026 and what falls under each

The rates have not changed since 1 January 2024. Food served in a restaurant is at the standard rate; takeaway is at the reduced rate if you separate the two by organisational measures (Art. 25(3) VAT Act).

Source: VAT Act SR 641.20, Arts. 23 and 25 (status as of 31 March 2025); FTA, VAT rates in Switzerland (accessed 2 November 2026).

On 29 November 2026 the people and cantons vote on additional OASI funding; the increase could take effect in early 2028 at the earliest (admin.ch, in German). The standard rate would rise from 8.1 to 8.5%, the special rate from 3.8 to 4%, the reduced rate would remain (Parliament, 19 June 2026, in German). Nothing changes for the 2026 and 2027 returns.

Calculating VAT: gross and net

From a net amount, multiply by 0.081: CHF 1,000 net gives CHF 81 VAT and CHF 1,081 gross. From a gross amount, divide by 1.081 and multiply by 0.081. That equals 7.493% of the gross amount (8.1 ÷ 108.1, calculated). Applying 8.1% to the gross amount overstates the tax.

Source: rates under Art. 25 VAT Act (status as of 31 March 2025); conversion calculated. For single amounts, use the Swiss VAT calculator.

Taxable, excluded, exempt: three categories with different effects

Every supply belongs to exactly one category. The distinction decides two things: whether you charge VAT, and whether you recover input tax on your costs.

Supplies excluded from the tax (Art. 21)

An excluded supply is not taxable unless you opt to tax it (Art. 21(1) VAT Act). The list in Art. 21(2) VAT Act has about thirty items. For SMEs, these matter most:

• medical treatment by doctors, dentists, physiotherapists and similar professions holding a licence to practise (no. 3); prostheses and orthopaedic devices remain taxable;
• teaching, training and further education, courses and exams (no. 11);
• membership fees of non-profit associations (no. 13) and entry fees for sports events (no. 15);
• insurance and reinsurance, and insurance brokerage (no. 18);
• credit, payment services, securities trading (no. 19);
• sale and letting of real estate (nos. 20 and 21); hotel rooms, campsites and separately let parking spaces remain taxable.

You have no input tax deduction on costs for excluded supplies (Art. 29(1) VAT Act). If a purchase serves both, you correct the input tax by the ratio of use (Art. 30(1) VAT Act).

The option under Art. 22

You may voluntarily tax any excluded supply, by showing the tax on the invoice or declaring it in the return (Art. 22(1) VAT Act). The option is not available for insurance, financial transactions and no. 23, nor for property the tenant or buyer uses exclusively for housing (Art. 22(2) VAT Act). It typically pays off when letting commercial premises to VAT-registered tenants: you recover input tax on construction and maintenance, and the tenant deducts the tax in turn.

Supplies exempt from the tax (Art. 23)

No domestic tax is due on exempt supplies (Art. 23(1) VAT Act). The main case is goods transported or shipped directly abroad (Art. 23(2) no. 1 VAT Act). Unlike excluded supplies, you keep the full input tax deduction. You prove the export with customs documents.

Source: VAT Act SR 641.20, Arts. 10, 18, 21, 22, 23, 29, 33 (status as of 31 March 2025).

Non-consideration under Art. 18(2) VAT Act

Because no supply is made, twelve kinds of money flow do not count as consideration (Art. 18(2) VAT Act). The FTA puts it this way for subsidies: they are non-consideration and therefore not subject to VAT (VAT Info 05, para. 1.3, in German). The word "in particular" in the Act shows the list is not exhaustive. The test remains whether a supply is given in return for the payment.

Source: VAT Act SR 641.20, Art. 18(2) and Art. 33 (status as of 31 March 2025); FTA, VAT Info 05 Subsidies and donations, in German (accessed 2 November 2026).

When a payment is a subsidy

The FTA requires three cumulative conditions: a public body pays, it receives no specific supply in return, and the payment as a rule rests on a legal basis (VAT Info 05, para. 1.1, in German). If the municipality orders a service for its own needs, such as converting a depot, that is taxable consideration.

Since 1 January 2025 a further rule applies: if a public body expressly designates a payment to the recipient as a subsidy, it counts as a subsidy (Art. 18(3) VAT Act). The designation must reach you individually; an entry in a subsidy database is not enough. It must be made no later than 240 days after the end of the tax period of payment, otherwise it has no effect (VAT Info 05, para. 1.4.10, in German; Art. 29(2) VAT Ordinance, in German).

Donation or sponsorship

A donation is a voluntary gift with no expectation of a supply in return (Art. 3(i) VAT Act). A neutral mention of the donor in a publication, even repeated, with company name and logo, remains a donation. Contributions from passive members and patrons to associations are also donations. Sponsorship exists as soon as the recipient provides advertising for the sponsor in return; the payment is then taxable (VAT Info 05, para. 2.2, in German). Donations never trigger an input tax reduction (VAT Info 05, para. 2.1.2, in German). A gift from a public body is as a rule a subsidy (VAT Info 05, para. 2.1.1, in German). Short version: Are subsidies and donations to a business subject to VAT? (in German).

Input tax reduction on subsidies

Non-consideration as a rule causes no reduction of the input tax deduction. If you receive funds under Art. 18(2)(a)–(c), you reduce the deduction proportionally (Art. 33 VAT Act). Art. 75 VAT Ordinance (in German) sets out three levels.

Source: VAT Ordinance SR 641.201, Art. 75, in German (status as of 28 October 2026); FTA, VAT Info 09 Input tax deduction, para. 2.3, in German (accessed 2 November 2026).

Three FTA practice rules apply to all variants. You declare the reduction in box 420 of the VAT return, the non-consideration itself in box 900 or 910; round the key to at least two decimal places (VAT Info 09, para. 2.3.8). The reduction is made in principle when the subsidy is paid, at the latest in the last return of the tax period (VAT Info 09, para. 2.3.6). For an operating deficit a second step follows: correct the remaining input tax for excluded turnover using a key without non-consideration (box 415). "Silent taxation" needs no approval, but you apply it for at least one tax period.

Taxable amount: what VAT is calculated on

The tax is calculated on the consideration actually received (Art. 24(1) VAT Act). This includes reimbursement of all costs, even if invoiced separately, such as expenses, postage or travel. For supplies to closely related persons, the arm's-length price applies (Art. 24(2) VAT Act).

Not included in the taxable amount are the VAT itself, disbursements you pay in the customer's name and for their account and show separately, and the value of the land when selling real estate (Art. 24(6) VAT Act). Court fees a lawyer advances for a client are a typical disbursement. See How is the Swiss VAT taxable amount determined? (in German).

Effective method or net tax rate

As a rule you use the effective method: output tax plus reverse-charge tax minus input tax for the period (Art. 36 VAT Act). Smaller businesses can instead use net tax rates if their taxable turnover does not exceed CHF 5,024,000 per year and their tax CHF 108,000 (Art. 37(1) VAT Act). A net tax rate is an industry rate with input tax built in as a lump sum. On your invoices you still show the statutory rate (VAT Info 12, part A, in German).

Source: VAT Act SR 641.20, Arts. 35–37 (status as of 31 March 2025); VAT Ordinance Art. 78, in German (status as of 28 October 2026); FTA, net tax rate method (accessed 2 November 2026).

The FTA gives an example: an architect with a 6.2% net tax rate declares CHF 216,200 half-year turnover including VAT and owes CHF 13,404.40 (VAT Info 12, para. 1.2, in German). Associations and foundations can also use flat tax rates (Art. 37(5) VAT Act).

Agreed or received consideration

The accounting basis decides in which period an invoice counts for tax. The legal default is agreed consideration; on application the FTA allows received consideration (Art. 39(1)–(2) VAT Act). The chosen basis applies for at least one tax period. The FTA can require received consideration if you collect a substantial part of payments before supplying (Art. 39(4) VAT Act).

Source: VAT Act SR 641.20, Arts. 39–41 (status as of 31 March 2025).

For advance payments and partial invoices, tax arises on payment or partial invoice even under agreed consideration (Art. 40(1)(b)–(c) VAT Act). See Is VAT accounted on agreed or received consideration? (in German).

Reporting periods, deadlines and invoices

Reporting periods

The tax period is the calendar year (Art. 34 VAT Act). Within it you file quarterly, or half-yearly with net tax rates (Art. 35(1) VAT Act). On application you file monthly if you regularly have input tax surpluses, or since 1 January 2025 annually if your taxable turnover does not exceed CHF 5,005,000 (Art. 35(1bis) VAT Act). With annual reporting under the effective method you pay three instalments on 30 May, 30 August and 30 November, with net tax rates one instalment on 30 August (FTA, annual reporting). You keep annual reporting for at least one tax period (Art. 35a VAT Act).

Deadlines

Return and payment are due within 60 days after the end of the reporting period (Arts. 71(1) and 86(1) VAT Act). Late payment in 2026 bears 4.0% default interest (FDF Interest Rates Ordinance, Annex 2, in German).

Invoices

Your invoice shows the supplier's name, place and VAT number, the customer's name and place, date or period of supply, type and extent, the consideration, and the tax rate and tax amount; if the tax is included in the price, the rate suffices (Art. 26(2) VAT Act). Till receipts up to CHF 400 need not identify the customer (Art. 57 VAT Ordinance, in German).

Correction, limitation, record keeping

Errors found when closing the books are corrected at the latest in the return for the period in which the 180th day after year-end falls (Art. 72(1) VAT Act). The FTA's right to assess tax expires five years after the end of the tax period, and in any case after ten years (Art. 42(1) and (6) VAT Act). Keep books and records until absolute limitation, real estate records for 20 years (Art. 70(2)–(3) VAT Act).

Worked examples

Graf Joinery Ltd, St. Gallen, 12 staff: cantonal grant for a drying kiln

The joinery uses the effective method and files quarterly. In 2026 it has CHF 1,800,000 taxable turnover excluding VAT. For a new energy-efficient timber drying kiln costing CHF 216,200 including CHF 16,200 VAT, the canton of St. Gallen pays CHF 60,000; the decision expressly designates it as a subsidy.

1. Output tax: CHF 1,800,000 × 8.1% = CHF 145,800.
2. The subsidy is asset-specific. Key: CHF 60,000 ÷ CHF 216,200 = 27.75% (VAT Info 09, para. 2.3.2).
3. Reduction: CHF 16,200 × 27.75% = CHF 4,495.50 in box 420. CHF 11,704.50 remains deductible.
4. Other input tax 2026: CHF 52,000, not reduced, because the subsidy concerns only the kiln.
5. After water damage, the insurer pays CHF 8,000 in damages: non-consideration under (i), no reduction (Art. 33(1) VAT Act).
6. Tax due 2026: CHF 145,800 − CHF 52,000 − CHF 11,704.50 = CHF 82,095.50.

With "silent taxation", Ms Graf would reach CHF 60,000 × 8.1 ÷ 108.1 = CHF 4,495.84, practically the same (VAT Info 09, para. 2.3.5). If the canton also contributes to the wage of a re-integrated employee, no reduction applies, because wages carry no input tax.

Lea Moser Physiotherapy, Winterthur, 4 staff: treatment and product sales

The practice earns CHF 420,000 from medically prescribed treatment; Ms Moser holds a licence to practise. This turnover is excluded (Art. 21(2) no. 3 VAT Act) and does not count for the threshold. In 2026 she sells bandages, training equipment and care products for CHF 104,000.

1. Relevant turnover: sales only, CHF 104,000 ≥ CHF 100,000 (Art. 10(2)(a) VAT Act). The practice becomes liable and registers within 30 days.
2. In 2027 Ms Moser raises prices by 8.1% and sells CHF 112,424 including VAT.
3. VAT due: CHF 112,424 × 8.1 ÷ 108.1 = CHF 8,424.
4. Input tax on CHF 50,000 net goods purchases: CHF 4,050, fully deductible.
5. Input tax on rent and treatment tables: not deductible insofar as they serve treatment (Art. 29 VAT Act); the sales share of the premises is corrected under Art. 30 VAT Act.
6. Tax due 2027 excluding the premises share: CHF 8,424 − CHF 4,050 = CHF 4,374.

Opting to tax treatment would be possible (Art. 22 VAT Act), but would make every treatment 8.1% dearer for patients and insurers.

Seeland Floorball Club, Biel, volunteer-run: sponsorship or donation

Annual income: membership fees CHF 85,000 and entry fees CHF 20,000 (both excluded), sponsorship with boards and shirt advertising CHF 160,000, club shop CHF 25,000, patron contributions CHF 45,000 with neutral mention in the annual report, and a municipal contribution of CHF 30,000 to the operating deficit, expressly designated as a subsidy.

1. Scenario A: taxable turnover CHF 160,000 + CHF 25,000 = CHF 185,000 < CHF 250,000. The club is exempt from liability (Art. 10(2)(c) VAT Act).
2. Scenario B: from 2027 a main sponsor pays an extra CHF 70,000 for social media advertising. Taxable: CHF 230,000 + CHF 25,000 = CHF 255,000 ≥ CHF 250,000. The club becomes liable.
3. Total revenue: turnover CHF 360,000 + non-consideration CHF 75,000 = CHF 435,000 (Art. 75(3) VAT Ordinance, in German).
4. Subsidy reduction: CHF 30,000 ÷ CHF 435,000 = 6.90%. On CHF 14,000 input tax: CHF 966 in box 420; CHF 13,034 remains.
5. Correction for excluded turnover, without non-consideration: CHF 105,000 ÷ CHF 360,000 = 29.17%; CHF 13,034 × 29.17% = CHF 3,802.02 in box 415 (VAT Info 09, para. 2.3.3). Deductible: CHF 9,231.98.
6. Output tax: CHF 255,000 × 8.1% = CHF 20,655. Tax due: CHF 20,655 − CHF 9,231.98 = CHF 11,423.02.

Patron contributions trigger no reduction, because donations are never reduced. Had the club promised patrons advertising, the CHF 45,000 would have been sponsorship, taxable already in scenario A.

Special cases

Subsidy for wage costs

A canton contributes to the wages of job seekers being re-integrated. Since wages carry no input tax, you reduce nothing (VAT Info 09, para. 2.3.1.1). The assignment must be clear from the decision or application.

Late or missing designation

If the municipality designates its contribution as a subsidy after 240 days, the designation does not count. You then classify the payment yourself using the FTA's three criteria (VAT Info 05, para. 1.4.10).

Interest-free loan from a public body

An interest-free loan is in itself non-consideration under (e). If it comes from a public body, the waived interest is a subsidy. In the FTA example, a CHF 2.5 million loan at 2% gives CHF 50,000 waived interest; with CHF 1 million expenses the start-up reduces input tax by 5% (VAT Info 09, para. 2.3.4).

Board fees

A fiduciary who sits on a client's board invoices bookkeeping at 8.1%. The board fee pays for a dependent activity and is non-consideration (Art. 18(2)(j) VAT Act). The fee statement shows no VAT.

Deposit on containers

A drinks wholesaler charges a deposit on crates. The deposit is not consideration (Art. 18(2)(h) VAT Act); show it separately from the drinks price so the 2.6% rate applies only to the drink.

Letting a commercial hall

A construction firm lets an empty hall to a VAT-registered garage. The rent is excluded (Art. 21(2) no. 21 VAT Act). By opting under Art. 22 VAT Act, it recovers input tax on renovation and maintenance. For residential use the option is not available.

Restaurant and takeaway

A bakery with a café sells sandwiches to take away at 2.6% and at the tables at 8.1%. The reduced rate applies only if the till separates the two sales (Art. 25(3) VAT Act); otherwise everything is at the standard rate.

What this means for you

1. Before closing 2026, classify every receipt without an invoice: subsidy, donation, damages or consideration. Record the classification in the booking text.
2. For every public contribution, ask for a decision that designates it as a subsidy and assigns it to wages or an asset; the deadline runs 240 days after the end of the tax period.
3. Calculate the input tax reduction at the latest in the last return of the tax period and declare it in box 420.
4. Assign every revenue type to a category: taxable with its rate, excluded or exempt. Numezis stores this per account and prepares the return from your entries.
5. Decide on a change of method or period for the current year no later than 60 days after the start of the tax period (Arts. 76b and 79 VAT Ordinance, in German).
6. Align your invoice templates with the six items in Art. 26 and separate deposits and disbursements.
7. Keep records for ten years, real estate records for twenty.

Common mistakes

1. Subsidy without input tax reduction. The FTA reclaims the reduction at audit, in the joinery example CHF 4,495.50, plus 4.0% default interest (FDF Ordinance, in German).
2. Sponsorship booked as a donation. If advertising is owed, the payment is taxable. On CHF 70,000 with no VAT invoiced you owe the tax included in the amount: CHF 70,000 × 8.1 ÷ 108.1 = CHF 5,245.14.
3. Confusing excluded and exempt. Input tax deducted on excluded supplies is lost at audit, retroactively for up to five years (Arts. 29 and 42 VAT Act).
4. 8.1% applied to the gross amount. On CHF 108,100 gross that gives CHF 8,756.10 instead of CHF 8,100, so CHF 656.10 paid too much. The correct share is 7.493%.
5. Switching accounting basis mid-year. The basis applies for at least one tax period (Art. 39(3) VAT Act); switching without approval creates double counting or gaps.
6. Records destroyed after five years. Without records, the FTA assesses the tax at its discretion (Art. 79 VAT Act); tax evasion carries a fine of up to CHF 400,000 (Art. 96 VAT Act).

Detailed answers

• All Swiss compliance answers, by topic → /en/compliance
• Are subsidies and donations to a business subject to VAT? (in German) → /de/compliance/mwst/mwst-subventionen-spenden
• From what turnover must a business register for VAT? (in German) → /de/compliance/mwst/umsatzgrenze-mwst-pflicht-unternehmen
• Is VAT accounted on agreed or received consideration? (in German) → /de/compliance/mwst/mwst-vereinbarte-oder-vereinnahmte-entgelte
• How is the Swiss VAT taxable amount determined? (in German) → /de/compliance/mwst/mwst-bemessungsgrundlage

Sources

1. Federal Act on Value Added Tax (VAT Act), SR 641.20, Arts. 1, 3, 10, 18, 21–26, 28–30, 33–42, 66, 70–72, 79, 86, 96 — https://www.fedlex.admin.ch/eli/cc/2009/615/en (status as of 31 March 2025; English is not an official language of Swiss law).
2. Value Added Tax Ordinance, SR 641.201, Arts. 29, 57, 75, 76b, 78, 79 (in German) — https://www.fedlex.admin.ch/eli/cc/2009/828/de (status as of 28 October 2026).
3. FTA, VAT Info 05 Subsidies and donations, paras. 1.1, 1.3, 1.4.10, 2.1.1, 2.1.2, 2.2 (in German) — https://www.gate.estv.admin.ch/mwst-webpublikationen/public/MI/05 (accessed 2 November 2026).
4. FTA, VAT Info 09 Input tax deduction, paras. 2.3.1.1 to 2.3.8 (in German) — https://www.gate.estv.admin.ch/mwst-webpublikationen/public/MI/09 (accessed 2 November 2026).
5. FTA, VAT Info 12 Net tax rates, part A and para. 1.2 (in German) — https://www.gate.estv.admin.ch/mwst-webpublikationen/public/MI/12 (accessed 2 November 2026).
6. FTA, VAT rates in Switzerland — https://www.estv.admin.ch/en/vat-rates-switzerland (accessed 2 November 2026).
7. FTA, net tax rate method — https://www.estv.admin.ch/en/net-tax-rate-method-2025 (accessed 2 November 2026).
8. FTA, annual reporting — https://www.estv.admin.ch/en/annual-reporting-2025 (accessed 2 November 2026).
9. FDF Ordinance on default and remuneration interest rates, SR 631.014, Annex 2 (in German) — https://www.fedlex.admin.ch/eli/cc/2025/564/de (status as of 1 January 2026).
10. Federal Council, vote of 29 November 2026 on additional OASI funding (in German) — https://www.admin.ch/de/ahv-zusatzfinanzierung (accessed 2 November 2026).
11. Parliament, final vote of 19 June 2026 (in German) — https://www.parlament.ch/de/services/news/Seiten/2026/20260619104626831194158159026_bsd070.aspx.