Fictitious Tax Deduction – A Welcome Tax Optimization
The fictitious VAT deduction is mentioned too rarely, yet it significantly reduces VAT.
The fictitious VAT deduction is mentioned too rarely, yet it significantly reduces VAT.
A fictitious input tax is an input tax deduction without stated VAT on the invoice you pay.
This is possible when a company purchases an item from a non-VAT-liable person, for example, from a private individual.
Although no VAT is stated on the invoice, the tax administration assumes that VAT was already paid in the purchase price at some point.
Therefore, the purchasing, VAT-liable company may claim this fictitious input tax, provided the item is used for business purposes and is clearly identifiable. (E.g., buying a car from a private individual)
Attention – if any of these points apply, the deduction may not be claimed.
- For purchases of art, collectibles, and antiques (margin taxation applies here)
- If the item was imported tax-free
- If the notification procedure was applied to the buyer of the used item
- If the taxable person imported the item into Switzerland
- If a compensation payment exceeds the amount of the payment made
Frequently Asked Questions
5 answers about this topic
The deduction is not limited to vehicles. It applies to almost all identifiable used goods that you buy from private individuals for your business – including high-end laptops, cameras, or office furniture. The key is "identifiability": it must be provable through a serial number or clear characteristic which exact item was purchased.
The tax administration allows you to calculate out the tax included in the price. At the current rate of 8.1%, this means: you divide the purchase price by 108.1 and multiply by 8.1. For CHF 20,000, you receive CHF 1,498.60 credited as an input tax deduction. This directly reduces your next VAT payment by this amount. A massive advantage compared to a private purchase without a company!
That is the flip side: once you have deducted the fictitious input tax, the item fully becomes business assets. If you later sell it (whether to a company or privately), you must mandatorily pay 8.1% VAT on the selling price. We calculate for you whether the deduction at purchase is worthwhile if a quick resale is planned.
No. This is a crucial strategic point. Like all input tax deductions, the fictitious deduction is excluded under the flat-rate tax method. If you plan to massively build up your fleet or inventory through private purchases (e.g., used vehicles), we calculate for you whether the effective method suddenly becomes much more lucrative than the flat rate due to the fictitious input tax.
No, absolutely nothing changes for the private seller. They receive their agreed price and have no tax consequences.
Author
Nikola Mirkovic
Head of Fiduciary & Accounting
Personal Consultation
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