Demystifying the MWST Nummer.
A Swiss Freelancer's Guide to VAT

First things first: MWST stands for "Mehrwertsteuer", which is German for Value Added Tax (VAT). The MWST Nummer is essentially your Swiss VAT identification number. It's like the VIP pass that lets you participate in the grand gala of taxable economic activities in Switzerland.

But wait, there's more! You might have also heard of the UID—the Unique Business Identification Number. Confused yet? Don't be. The UID is a universal identification number assigned to every business entity in Switzerland, and when you're registered for MWST, your UID gets a fancy suffix: "MWST". So your full VAT number looks something like this: CHE-123.456.789 MWST.

MWST Nummer vs. UID: What's the Difference?

➾ UID (Unique Business Identification Number): A unique identifier for businesses in Switzerland, used across various governmental agencies.

➾ MWST Nummer: Your UID plus the "MWST" suffix, signifying you're registered for VAT purposes.

Think of the UID as your business's social security number and the MWST Nummer as its passport for tax purposes.

➤ Mandatory Registration Thresholds

In Switzerland, you must register for MWST if:

• Your turnover exceeds CHF 100,000 per year from taxable goods and services.
• You're a non-profit organization or sports club with revenues over CHF 150,000.

If you're just starting out and not hitting those numbers yet, you might think you're off the hook. But hold on!

Voluntary Registration: A Strategic Move?

You can voluntarily register for MWST even if you don't meet the thresholds.

Why would you want to do that?

✱ Benefits:

• Input Tax Deduction: Reclaim the MWST you pay on business expenses.
• Professional Image: Larger clients might expect you to be MWST-registered.
• Future-Proofing: If you're on track to exceed the threshold, registering early can simplify things.

✱ Drawbacks:

• Administrative Burden: More paperwork and compliance requirements.
• Cash Flow Implications: You'll need to manage the collection and payment of MWST.

So, Should You Register?

Consider the nature of your clients and your business growth trajectory. If you're dealing mostly with other businesses that can reclaim MWST, registering could be beneficial. For more details on VAT registration, check out how to register in Zurich, St. Gallen, or Vaud.

Switzerland's VAT system isn't one-size-fits-all. Different goods and services are taxed at different rates. For an overview of current VAT rates, visit VAT Rates 2024.

➤ Standard Rate: 8.1%

Applies to most goods and services, including:

• Professional services (that's you, freelancers!)
• Electronics
• Vehicles

➤ Reduced Rate: 2.6%

For essential goods:

• Food and non-alcoholic beverages
• Books and newspapers
• Medications

➤ Special Rate: 3.8%

• Accommodation services (hotels, B&Bs)

➤ Zero Rate: 0%

• Certain exports
• International services

➤ Exemptions

Some services are exempt from MWST, such as:

• Healthcare services
• Educational courses
• Insurance and financial services

Why Does This Matter to You?

As a freelancer, you need to know which rate applies to your services. Charging the wrong rate can lead to penalties and unhappy clients.

➤ Invoice Requirements

Your invoices must include:

1. Your full business name and address
2. Client's name and address
3. Invoice date
4. Unique invoice number
5. Description of goods or services provided
6. Total amount charged
7. Applicable MWST rate and amount
8. Your MWST Nummer (e.g., CHE-123.456.789 MWST)

➤ Displaying Your MWST Nummer Correctly

Ensure your MWST Nummer is displayed in one of the following formats:

• CHE-123.456.789 MWST
• CHE-123.456.789 TVA (French)
• CHE-123.456.789 IVA (Italian)

Note: Using "VAT" as the suffix is not allowed in Switzerland.

➤ Calculating MWST

• Exclusive Pricing: Service fee + MWST = Total invoice amount
• Inclusive Pricing: Total amount includes MWST (less common in B2B settings)

➤ Example:

If you charge CHF 1,000 for your services at the standard rate:

• MWST Amount: CHF 1,000 x 8.1% = CHF 81
• Total Invoice Amount: CHF 1,081

➤ Payment Terms

Be clear about payment deadlines and methods. Late payments can complicate your MWST reporting.

Now that you're collecting MWST, the taxman expects his due. Here's how to stay on the right side of the Federal Tax Administration.

➤ Reporting Periods

You can choose to file your MWST returns:

• Quarterly
• Semi-annually (for small businesses with annual tax liability under CHF 4,000)

Maintain all invoices, receipts, and relevant documents for 10 years. The tax authorities can request to see them at any time. Simplify your VAT filings with tools like Magic Heidi's MWST-compliant Invoicing.

➤ Filing Your Return

• Online: Use the ESTV SuisseTax portal
• By Mail: Submit the completed MWST return form sent to you

➤ Payment Deadlines

• Payment is due within 60 days after the end of the reporting period.
• Late payments incur interest and possible penalties.

➤ Keeping Records

Maintain all invoices, receipts, and relevant documents for 10 years. The tax authorities can request to see them at any time.

✦ What to Keep

• Sales Invoices: Copies of all invoices issued
• Purchase Invoices: Invoices for business expenses where you paid MWST
• Contracts and Agreements: Any documents supporting your transactions
• Accounting Records: Ledgers, journals, and financial statements

✦ Digital vs. Paper Records

Digital records are acceptable but must be easily accessible and readable. Backup your data regularly! To ease this, check out Comprehensive Financial Management Solutions for Swiss freelancers.

✦ Consequences of Non-Compliance

• Financial Penalties: Fines and interest on unpaid MWST
• Legal Action: In severe cases, criminal charges for tax evasion
• Reputation Damage: Trust us; you don't want to be on the FTA's naughty list

✦ Dealing with EU Clients

• Switzerland is not in the EU, so different rules apply.
• Services Provided to EU Clients:
  • Generally zero-rated for MWST if the place of supply is abroad.
  • You don't charge Swiss MWST, but your client may need to account for VAT in their country.

✦ Importing Services

• Reverse Charge Mechanism: If you receive services from abroad, you may need to account for MWST as if you supplied the service yourself.

✦ Do You Need an EU VAT Number?

• Generally, No: Swiss businesses don't get EU VAT numbers unless they register in an EU country.
• Exceptions: If you have a fixed establishment in the EU or meet certain thresholds for distance selling.

✦ Pro Tip:

Consult a tax advisor for cross-border transactions. International VAT can be a minefield.

✦ Seamless Invoicing with MWST Integration

• Automatic MWST Calculations: No more manual math errors.
• Professional Templates: Include all necessary invoice details, including your MWST Nummer.
• QR-Code Invoices: Swiss-specific feature that streamlines payments.

✦ Expense Tracking and Input Tax Deduction

• AI-Powered Expense Scanning: Upload receipts, and Magic Heidi extracts the necessary info.
• Input Tax Calculations: Easily track MWST paid on expenses for deduction purposes.

✦ Real-Time Financial Overview

• Dashboard Analytics: Monitor your revenue, expenses, and tax liabilities.
• Tax Estimations: Get a live estimate of your upcoming MWST payments.

✦ Cross-Platform Syncing

• Mobile and Desktop Apps: Access your data anywhere, anytime.
• Secure Cloud Storage: Your financial data is safe and backed up.

✦ Don't Just Take Our Word for It!

"Invoicing is a breeze with this app. The expense scanning feature is great too! You also get a prompt reply anytime you write support with comments or doubts."
— Maduro, iPhone user