A freelancer in Zurich writes invoices for consulting, sells digital templates on the side, and has just started a new line of business. For VAT, she faces a simple but important question: can she still settle with a single net tax rate, or does she have to split her turnover?

That is exactly where many mistakes happen in practice. The flat-rate VAT method (Saldosteuersatz) does simplify the return, but since 2025 the 10% rule requires much cleaner segmentation when you have several activities. If you mix consulting, trade, workshops, or digital products, you need more than the right rate. You also need to know when an additional rate becomes mandatory.

What the net tax rate method means in Switzerland

The net tax rate is a simplified form of the Swiss VAT return. Instead of calculating the tax due from every outgoing sale and every individual input-tax receipt, you multiply your gross turnover by the net tax rate approved by the FTA. Input tax is already built into that flat rate. You therefore do not need to process each laptop invoice, software licence, or office expense separately for VAT. The FTA describes the net tax rate method for 2025 as a simplified form of settlement with input tax included on a flat-rate basis.

For the freelancer in Zurich, that means she first checks whether her business meets the legal requirements. Relevant annual turnover from taxable and tax-exempt supplies may be at most 5.024 million francs. In addition, the tax liability calculated with the applicable net tax rates may not exceed 108'000 francs per year. These thresholds apply under the new rules from 1 January 2025.

What is covered on a flat-rate basis in day-to-day work

Under the effective method, you collect the VAT from your outgoing invoices and deduct the allowable input tax from business expenses. With the net tax rate method, that item-by-item calculation falls away. The approved rate already reflects the average input-tax burden of your activity on a flat-rate basis.

That makes the method especially clear if you mainly sell your working time and have only a few larger business expenses. A consultant, a copywriter, or a developer with modest purchases then does not have to take apart every incoming invoice for the VAT return.

Practical rule: The net tax rate is not a percentage you pick yourself. What counts is the rate the FTA assigns to your activity or activities.

The first check before you decide

Before you register or switch methods, you should clarify three things:

• Turnover profile: Which supplies do you actually provide, and which turnover is taxable?
• Activities: Do you sell only services, or also goods, courses, and digital products?
• Input-tax picture: Are your business expenses rather low, or do larger investments come up regularly?

The net tax rate method can reduce administration. It is not automatically cheaper. If you classify your activities wrongly or fail to separate mixed turnover cleanly, you do not simplify the books. You just move the error into the VAT return.

How to calculate your VAT with the net tax rate

A web designer generates 120'000 francs in annual turnover. For consulting services, the approved net tax rate is 8.1 %. The calculation is then:

1. Determine gross turnover: 120'000 francs.
2. Apply the net tax rate: 120'000 francs × 8.1 %.
3. Determine the tax amount: 9'720 francs.

The basic formula is therefore clear: gross turnover multiplied by the approved net tax rate equals the tax due. For the return, use the rate that matches your actual activity. The general Swiss VAT rates from the FTA, including the standard rate of 8.1 %, the reduced rate of 2.6 %, and the special rate for accommodation of 3.8 %, are not automatically your net tax rate. The net tax rate is set by industry.

What you need to watch with expenses

Under the net tax rate method, you do not deduct input tax again from individual receipts. The laptop, software, and office supplies still belong in the financial accounts. For the VAT return, however, they do not create a separate input-tax deduction.

The flat rate already takes the average input-tax burden of your activity into account. With few business expenses, that is often straightforward. Regular large investments, by contrast, can be a reason to look at the effective method.

How to split mixed income correctly

A solo self-employed person with consulting and goods sales may not simply apply a single rate to all turnover. Assign each amount of turnover to the supply that was actually sold. Consulting, hardware, courses, or digital products can trigger different net tax rates.

Since 2025, the 10% rule applies to mixed businesses. Activities that make up at least 10 % of total turnover must be taken into account for the net tax rates and split cleanly. Keep separate turnover lines and document the allocation. A web designer who also resells hardware should report consulting turnover and goods turnover separately.

For a quick plausibility check, you can use the VAT calculator for Switzerland. With several activities, that result does not replace a review of how turnover is split.

For a visual explanation of the calculation steps:

Net tax rate or effective method compared

Choosing between the net tax rate method and the effective method is a choice between less administration and precise settlement of input tax. Neither method is automatically better for every sole proprietorship. What matters is your expense structure, your activities, and how strongly your input tax is spread across the year.

With few business expenses, a lot speaks for the net tax rate. You calculate with the approved rate on gross turnover and do not have to extract input tax from every single receipt. The effective method fits businesses that regularly have high taxed purchases or investments and can actually use the input-tax deduction.

When the flat rate shows its strength

A self-employed consultant who mainly sells their own work often has a different cost profile than a trader with inventory. For the consultant, the administrative advantage matters because the VAT return does not depend on many individual input-tax items. For the trader, or for a business with expensive equipment, precise capture of input tax can matter more than the simplification.

The calculation should not look at a single month only. A larger purchase can change the picture temporarily, while regular expenses influence the choice of method over the long term. Compare your actual expense pattern with the net tax rate before you commit.

What people often underestimate when switching

A change of method is not a spontaneous switch you flip at will in the middle of the financial year. You need to clarify the permitted conditions and deadlines with the FTA or your fiduciary. Plan the change so that open invoices, turnover already posted, and internal coding continue cleanly.

You can find a detailed comparison of the two variants in the overview of the VAT settlement method. A gut feeling is not enough for the decision. Draw up a simple comparison of your activities, turnover, and expenses, and check whether the administrative relief justifies forgoing individual input-tax deductions.

The 10% rule for mixed businesses and several activities

Since 1 January 2025, the 10% rule is especially important for solo self-employed people with several lines of work. If you take up a new activity or expand one, you must apply a new or additional net tax rate when its share of turnover is more than 10 % of taxable total turnover. The FTA explains the new application of the net tax rate method from 2025 and the related turnover segmentation.

A UX designer, for example, generates turnover from consulting, digital products, and workshops. Consulting is her main business. As soon as sales of digital products become economically relevant and exceed the threshold of more than 10 % of taxable total turnover, she may not simply keep treating that turnover under the consulting rate. She must record the activity separately and apply the matching net tax rate.

How to proceed with several activities

First, name the activities. Do not just write “turnover” in your accounts. Create understandable categories, for example consulting, goods sales, online products, and workshops.

Second, record turnover separately. Every invoice needs an allocation to the supply that was actually sold. An invoice with consulting and product sales should either be split or documented clearly.

Third, check the share. Compare the turnover of each activity with taxable total turnover. If a new activity becomes more than 10 % of total turnover, you need the additional net tax rate for it.

Fourth, document the rates. Record why you use a given rate and from when the additional activity became relevant. That makes later review easier to follow.

From practice: The most common error is not in the multiplication, but in assigning the supply wrongly. A cleanly labelled invoice is therefore just as important as the right formula.

What does not work

Booking all turnover under the main activity’s rate just because the invoice comes from the same business is not a defensible approach. A catch-all category such as “other income” is equally problematic. It stops you from seeing when a new line of business crosses the relevant turnover threshold.

In your accounting software, the categories should already be visible when you create the quote or invoice. That way the segmentation does not only appear at year-end from a painful search through bank movements and PDFs. Especially with workshops and digital products, you should keep the description of the supply, the revenue account, and the VAT allocation consistent.

Setting up the net tax rate in accounting software

Software cannot replace the tax decision. It can, however, stop you from having to rethink every day which turnover belongs to which category. Set up the net tax rate method only after the activities and the related FTA rates are clear.

Setup in practice

1. Select the VAT method: Switch VAT administration to the net tax rate method.
2. Enter the rates: Record the approved rate for the main activity and additional rates for economically relevant side activities.
3. Create turnover categories: Separate consulting, trade, workshops, or digital products into their own categories.
4. Test invoices: Create a sample invoice for each activity and check that the correct VAT allocation appears.
5. Prepare the return: Before each reporting period, check turnover by category and export the tax-ready documents.

For incoming invoices, capturing receipts remains important even if you do not claim individual input tax. The receipts still belong in the accounts because they matter for expenses, profit, the annual financial statements, and evidence. AI-supported capture can take supplier, date, amount, currency, and category from photos or PDFs. You should still review the proposed coding for unusual receipts.

Do not forget the bank and the export

CSV import of bank statements makes it easier to reconcile payments, invoices, and expenses. It does not replace a check of the turnover category. A payment can be matched correctly and still be assigned to the wrong net tax rate.

For day-to-day work with invoices, receipts, bank import, and tax-ready exports, Magic Heidi as accounting software for Switzerland is one possible solution for the self-employed and sole proprietorships. What matters is that you define the categories cleanly and check the settings regularly, especially when you launch a new offer.

Who the net tax rate really pays off for

The net tax rate mainly fits self-employed people who have modest input tax, few complex transactions, and clearly identifiable activities. Legal use requires that the turnover and tax thresholds are met, as described in the FTA publication on net tax rates.

A short decision aid:

• Little input tax: Your business expenses do not include large or regular investments.
• Clear supplies: You mainly sell one activity and can separate side businesses cleanly.
• Less administration: You want to avoid reviewing input tax item by item.
• Regular checks: You review new activities and shares of turnover instead of carrying the original setting forward unexamined.

The effective method deserves a closer look if you have high input-tax amounts, expensive purchases, or a demanding mix of activities. As a fiduciary, I would not make the choice only once. I would recalculate whenever the offering, the costs, or the turnover structure change in a material way.

Magic Heidi brings Swiss invoices, receipt capture, VAT administration, bank import, and tax-ready exports together in one application. If you want to keep your net tax rates and turnover categories clean, visit Magic Heidi and see whether the solution fits your day-to-day work.