VAT: VAT and You – A Topic That Causes Uncertainty for Many

Entrepreneurs deal with VAT daily – its complexity is well known – especially to us. We won't leave you alone with this topic. From CHF 100,000 in revenue, you must register your business with the tax office, and it's important to make a smart choice.

We handle the registration, settlements, clarifications, or preliminary review for you, so you're aware of the tax implications.

Are you a foreign company with revenue exceeding 100,000 francs in your country? Then you must register for Swiss VAT if you operate in Switzerland and provide taxable services – fiscal representation through FinanceRock.

What risks are hidden behind VAT:

• Errors in VAT and accounting
• Unnecessarily high tax payments
• Time loss
• Back payments and trouble with authorities

With FinanceRock, entrepreneurs receive:

• Security in the tax and financial world
• Optimized processes
• Clean accounting
• Tax savings
• Peace of mind and clear decision-making foundations

Private Use Portion VAT

Why a private use portion? When a company vehicle is used not only for work but also privately, a benefit arises. However, when purchasing and with ongoing costs, VAT was deducted as a business expense.

To ensure fair taxation of private use, VAT requires a correction. The so-called private portion ensures that only the business portion is tax-advantaged and private use is correctly accounted for.

VAT Settlement Methods

VAT allows us to settle it in several ways and at various deadlines – these are crucial for liquidity planning, for example:

Effective Method

The effective method is suitable for companies with many input tax-deductible expenses (suppliers with stated VAT or many customs clearances). The input tax on supplier invoices is fully deducted (8.1%), and 8.1% is also charged on revenues (which are taxable). The difference from these inputs and outputs is submitted to the VAT office.

Flat-Rate Tax Method

The flat-rate tax method is often used by companies that don't have many input tax-eligible expenses. Here, only the revenue is settled at a lower tax rate (e.g., 6.2% on total revenue). On your invoice, you show the full 8.1% – the special rate only applies internally for accounting/settlement.

Agreed or Received?

Agreed: VAT is settled as soon as an invoice is issued – regardless of whether the customer has already paid. Advantage: Clear and straightforward accounting. Disadvantage: VAT must be paid even if the customer hasn't paid yet.

Received: VAT is only settled when the customer actually pays. Advantage: Preserves liquidity as no VAT needs to be pre-financed. Disadvantage: Slightly more accounting effort.

Reverse Charge – The Forgotten Unknown

It ensures that services from abroad are treated fairly and equally to domestic offerings. Anyone regularly obtaining services or certain deliveries from abroad must check whether reverse charge tax is owed. This applies to businesses as well as private individuals.

Fictitious Tax Deduction – A Welcome Tax Optimization

The fictitious VAT deduction is also mentioned too rarely, yet it reduces VAT. This involves 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.

Margin Taxation

Margin taxation ensures that VAT is not calculated on the entire selling price, but only on your actual profit margin. This regulation applies when you purchase certain items from private individuals or other sellers who do not pay VAT and therefore could not claim input tax.

Margin taxation in Switzerland primarily applies to trading in collectibles: art objects, antiques, other collectibles (coins, stamps, jewelry), and vintage cars (motor vehicles older than 30 years).