::feature-image{.bg-hero-gradient-1}
---
primary: true
label: VAT Guide 2025
orientation: horizontal
title: "Swiss VAT Methods Explained: <span>Choose the Right One</span> for Your Business"
subtitle: Choosing the wrong VAT method costs Swiss businesses thousands of francs every year. Not in taxes—in wasted administrative hours. This guide breaks down every VAT accounting method available in Switzerland for 2025.
image:
src: "taxes.webp"
alt: "Swiss VAT Tax Documentation"
---
::
::pages-landing-pain
---
title: "January 2025 Brought <span>Major Changes</span>.<br>Are You Up to Date?"
subtitle: The January 2025 LTVA revision introduced new annual declaration options, updated thresholds, and changed rules for net tax rates. If you're still working with 2023 information, you're making decisions with outdated data.
items:
- icon: 📅
title: Annual Declarations
subtitle: New option for businesses under CHF 5M
- icon: 🔄
title: Easier Switching
subtitle: Change methods at any calendar year
- icon: 💻
title: Mandatory E-Filing
subtitle: Paper forms no longer accepted
---
::
::hero-basic{.bg-white}
---
label: Current Rates
title: "Swiss VAT Rates <span>2025-2026</span>"
subtitle: Before diving into methods, here are the current rates that remained unchanged from 2024.
---
::feature-grid
---
id: vat-rates-grid
item-width: 250px
items:
- title: "Standard Rate"
description: "8.1% — Most goods and services"
icon: 📊
- title: "Reduced Rate"
description: "2.6% — Food, books, newspapers, medicines"
icon: 📚
- title: "Special Rate"
description: "3.8% — Hospitality services"
icon: 🍽️
- title: "Registration Threshold"
description: "CHF 100,000 annual turnover"
icon: 📈
---
::
::
::markdown
---
boxed: true
---
## The Two Main VAT Calculation Methods
Every VAT-registered business in Switzerland uses one of two systems to calculate what they owe. Think of these as the foundation—everything else builds on top.
::
::feature-image
---
label: Method 1
orientation: horizontal
title: "Effective Method: <span>Input Tax Deduction</span>"
subtitle: "This is the standard approach. You track VAT on everything: collect VAT on every sale (output tax), track VAT on every business purchase (input tax), and pay the difference."
image:
src: "analytics.{locale}.webp"
alt: "Magic Heidi Analytics for VAT Tracking"
---
::
::markdown
---
boxed: true
---
### Effective Method Example
You invoice **CHF 108,100** including 8.1% VAT. Your output tax is **CHF 8,100**.
You spent **CHF 32,430** on business supplies including VAT. Your input tax is **CHF 2,430**.
**VAT due: CHF 8,100 - CHF 2,430 = CHF 5,670**
**Best for:**
- Businesses with significant deductible expenses
- Companies with complex supply chains
- Exporters who benefit from input tax recovery
- Any business above the TDFN thresholds
::
::feature-image
---
label: Method 2
orientation: horizontal
title: "Net Tax Rate Method: <span>TDFN Simplified</span>"
subtitle: "This simplified approach uses a flat percentage based on your industry. No tracking input tax on purchases—apply your industry-specific rate to total turnover and pay that amount."
image:
src: "swiss-business-office.webp"
alt: "Swiss Business Office"
---
::
::markdown
---
boxed: true
---
### TDFN Example
An architect with TDFN rate of **6.2%** earns CHF 400,000 (including VAT) per semester.
**VAT due: CHF 400,000 × 6.2% = CHF 24,800**
That's it. No need to track VAT on office supplies, software, or equipment.
### Eligibility Requirements (2025)
- Annual taxable turnover: Maximum **CHF 5.024 million**
- Annual VAT liability: Maximum **CHF 108,000**
- Swiss-based business (foreign companies lost TDFN access in 2025)
### Sample TDFN Rates by Industry
| Industry | Rate |
|----------|------|
| Food delivery services | 0.1% |
| Travel agencies | 2.1% |
| Sports equipment rental | 3.0% |
| Marketing services | 5.9% |
| Architects | 6.2% |
| Translation agencies | 6.8% |
::
::pages-landing-features
---
label: 2025 Updates
title: |
What Changed in 2025:<br/>
<span>Key LTVA Updates</span>
subtitle: The January 2025 revision brought significant changes that affect how you manage VAT.
items:
- icon: 📅
title: New Annual Declaration Option
description: Businesses under <strong>CHF 5.005 million</strong> turnover can now request annual declarations. One submission per year instead of four or two.
features:
- Less paperwork
- Fewer deadlines
- Reduced administrative burden
- Request through AFC e-portal
- icon: 🔢
title: Multiple TDFN Rates Allowed
description: Businesses must now apply the appropriate TDFN rate to any activity representing <strong>more than 10%</strong> of total taxable turnover.
features:
- No cap on number of rates
- Apply rate per activity type
- More accurate calculations
- Reflects true business mix
- icon: 🔄
title: Easier Method Switching
description: Previously required a 3-year waiting period. Now you can <strong>switch methods at the start of any new calendar year</strong>.
features:
- Switch at any January 1
- No waiting period
- Submit before year end
- AFC confirms eligibility
- icon: 💻
title: Mandatory Electronic Filing
description: All VAT registration and declarations must go through the <strong>Federal Tax Administration's e-portal</strong>. Paper forms are no longer accepted.
features:
- Register online only
- Submit declarations digitally
- Receive confirmations electronically
- Foreign companies excluded from TDFN
---
::
::hero-basic{.bg-white}
---
label: Declaration Timing
title: "Agreed vs. Received <span>Consideration</span>"
subtitle: Within each calculation method, you choose when to report VAT. This affects your cash flow significantly.
---
::feature-grid
---
id: consideration-grid
items:
- title: "Agreed Consideration"
description: "Invoice-Based: Report VAT when invoices are issued—regardless of payment status. You pay VAT before receiving payment."
icon: 📄
- title: "Received Consideration"
description: "Payment-Based: Report VAT when money actually changes hands. Better cash flow, especially with slow-paying clients."
icon: 💰
---
::
::
::markdown
---
boxed: true
---
### Agreed Consideration (Invoice-Based)
**Scenario:** You send a CHF 10,810 invoice on March 15. Your quarterly declaration covering January-March includes that CHF 810 output tax. Even if the client pays on May 20.
✅ Matches standard debtor-creditor accounting
✅ Required for most medium and large businesses
❌ You pay VAT before receiving payment
❌ Bad debts require adjustments after the fact
### Received Consideration (Payment-Based)
**Scenario:** Same CHF 10,810 invoice sent March 15. Client pays May 20. That VAT appears in your Q2 declaration, not Q1.
✅ Pay VAT only on money you've received
✅ No adjustment needed for bad debts
✅ Better cash flow management
**Best for:** Small businesses without formal accounts receivable systems. Freelancers and sole proprietors.
::
::pages-landing-comparison
---
label: Decision Framework
title: "Which Method <span>Fits Your Business?</span>"
subtitle: Use this comparison to guide your choice between the Effective Method and TDFN.
table:
columns:
- label: Criteria
- label: Effective Method
highlight: true
- label: TDFN Method
rows:
- label: Best for expenses
values:
- text: "<span class='check'>✓</span> High expenses (30%+ of revenue)"
highlight: true
- text: "<span class='check'>✓</span> Minimal expenses"
- label: Complexity
values:
- text: More tracking required
highlight: true
- text: "<span class='check'>✓</span> Simpler calculation"
- label: Exporters
values:
- text: "<span class='check'>✓</span> Input tax recovery benefits"
highlight: true
- text: "<span class='cross'>✗</span> No recovery"
- label: Turnover limit
values:
- text: "<span class='check'>✓</span> No limit"
highlight: true
- text: Max CHF 5.024 million
- label: VAT liability limit
values:
- text: "<span class='check'>✓</span> No limit"
highlight: true
- text: Max CHF 108,000
- label: Foreign companies
values:
- text: "<span class='check'>✓</span> Allowed"
highlight: true
- text: "<span class='cross'>✗</span> Not allowed (2025)"
---
::
::feature-image
---
label: Practical Example
orientation: horizontal
title: "Same Business, <span>Different Methods</span>"
subtitle: "Let's compare: Marketing consultant with CHF 200,000 annual revenue and CHF 30,000 business expenses (both including VAT)."
image:
src: "coffee-shop.webp"
alt: "Swiss Business Comparison"
---
::
::markdown
---
boxed: true
---
### Effective Method Calculation
- Revenue: CHF 200,000 ÷ 1.081 = CHF 185,013 net
- Output VAT: **CHF 14,987**
- Expenses: CHF 30,000 ÷ 1.081 = CHF 27,752 net
- Input VAT: **CHF 2,248**
- **VAT due: CHF 14,987 - CHF 2,248 = CHF 12,739**
### TDFN Calculation (5.9% rate for marketing)
- Revenue × rate: CHF 200,000 × 5.9% = **CHF 11,800**
**Result:** TDFN saves **CHF 939 annually** in this scenario.
> ⚠️ But reverse the numbers—CHF 200,000 revenue, CHF 80,000 expenses—and the effective method wins by a significant margin. Always run the numbers for your specific situation.
::
::hero-basic{.bg-white}
---
label: Important Deadlines
title: "Key Deadlines <span>You Can't Miss</span>"
subtitle: VAT declarations and payments are due within 60 days after each period ends. Miss the deadline? Interest charges begin immediately.
---
::feature-grid
---
id: deadline-grid
item-width: 200px
items:
- title: "Q1 Deadline"
description: "Period ends March 31 → Due May 30"
icon: 📅
- title: "Q2 Deadline"
description: "Period ends June 30 → Due August 29"
icon: 📅
- title: "Semi-Annual H1"
description: "Period ends June 30 → Due August 29"
icon: 📆
- title: "Annual"
description: "Period ends Dec 31 → Due March 1"
icon: 🗓️
---
::
::
::pages-landing-pain
---
title: "Common Mistakes <span>to Avoid</span>"
subtitle: These errors cost Swiss businesses time and money every year. Make sure you're not making them.
items:
- icon: ❌
title: Not Running the Numbers
subtitle: "Choosing TDFN without calculating effective method costs first"
- icon: 💸
title: Wrong Consideration Method
subtitle: "Using agreed consideration with unreliable, late-paying clients"
- icon: ⏰
title: Missing the 60-Day Rule
subtitle: "Interest charges accumulate quickly—set calendar reminders"
---
::
::markdown
---
boxed: true
---
## How to Switch Methods
Under the 2025 rules, switching is simpler:
1. **Timing:** Submit your request before the new calendar year begins
2. **Where:** Through the AFC e-portal
3. **Processing:** AFC reviews and confirms eligibility
4. **Start date:** Changes take effect January 1
For TDFN applications, you'll typically need 3 years of operating history under the effective method—unless your professional association already has approved sector rates.
::
::feature-image
---
label: Simplify VAT
orientation: horizontal
title: "Simplify VAT Management with <span>the Right Tools</span>"
subtitle: "VAT compliance has real costs—even when the math works out to zero. Every invoice tracked, every declaration filed, every deadline monitored takes time. Magic Heidi automates VAT calculations, tracks deadlines, and generates compliant declarations."
image:
src: "invoice-list.{locale}.webp"
alt: "Magic Heidi VAT Management"
---
::
::pages-landing-faq
---
label: FAQ
title: Frequently Asked Questions
items:
- question: "Can I voluntarily register for VAT below CHF 100,000 turnover?"
answer: "Yes. Voluntary registration lets you recover input VAT on business purchases. Useful if you have significant startup costs or B2B clients who prefer VAT-registered suppliers."
- question: "What if I exceed the TDFN thresholds mid-year?"
answer: "You must switch to the effective method at the start of the following calendar year. The AFC monitors this."
- question: "Do I show the TDFN rate on my invoices?"
answer: "No. Always show the legal rate (8.1%, 2.6%, or 3.8%) on invoices. The TDFN rate is only for your internal calculation."
- question: "How long must I keep VAT records?"
answer: "10 years from the end of the fiscal year they relate to."
- question: "Can I use different methods for different business activities?"
answer: "No. You choose one calculation method (effective or TDFN) for the entire business. But with TDFN, different activities may use different sector rates."
---
::
::pages-landing-final-cta
---
title: "Focus on Your Business, Not Your VAT Paperwork"
subtitle: "Whether you use the effective method or TDFN, agreed or received consideration, Magic Heidi handles the complexity automatically."
primary: Start Free Trial
secondary:
label: Explore VAT Features
url: /vat-management
---
::