How to Set Up VAT in Magic Heidi (Step-by-Step Guide for Swiss Freelancers)

To set up VAT in Magic Heidi, go to Settings → My Company, scroll to the VAT section, and enter your VAT number. That single action unlocks VAT-enabled invoicing, expense tracking with VAT deduction, and a ready-to-file quarterly VAT return — all without leaving the app.

But here's the part nobody tells you: most Swiss freelancers configure VAT wrong on day one. They pick the wrong tax method, forget to track VAT on expenses, and then scramble at quarter-end trying to piece together a return from spreadsheets. If you're newly VAT-registered, or you're tired of fighting your current tool, this guide walks you through every option, every choice, and every screen you'll touch.

By the end, you'll have a clean VAT setup, invoices that calculate the right amount automatically, and a quarterly declaration that takes about 30 seconds to export. Let's go.

What "Enabling VAT" Actually Does in Magic Heidi

Once you save a VAT number in your settings, four things happen at once: invoices gain a VAT rate selector per line item, expenses gain a VAT input field so you can reclaim input tax, your analytics start separating net revenue from VAT collected, and a new VAT Declaration section appears in your dashboard.

That last one is the quiet hero. It's the difference between filing your return in three minutes and spending a Saturday afternoon reconciling PDFs.

Let's take the example of Léa, a fictional Lausanne-based UX designer who crossed the CHF 100,000 revenue threshold in October. She registered for VAT, got her number from the AFC, and opened Magic Heidi expecting a complicated setup. She pasted her VAT number, picked "additive" and "effective rate," and was done in under two minutes. Her next invoice automatically added 8.1% on top — no spreadsheet, no manual math.

Ready to do the same? Open your Magic Heidi settings → and have your VAT number ready before we go further.

Step 1: Add Your VAT Number

Head to Settings → My Company. You'll see a section for business information, and underneath, a VAT section. Paste your VAT number (the one that looks like CHE-123.456.789 MWST) and hit save.

That's the trigger. The moment Magic Heidi has a VAT number on file, every other VAT-related feature lights up across the app.

You'll also see new configuration options appear directly below — VAT mode and VAT tax method. Don't skip these. Choosing the right combo here saves hours of cleanup later.

Step 2: Choose Your VAT Mode (Additive vs. Inclusive)

This is the first real decision, and it confuses a lot of new freelancers. Here's the simple version (full comparison table below).

Most Swiss freelancers choose additive. It's the standard, it's transparent on the invoice, and it keeps your quoted day rate clean. You quote CHF 1,200/day, the client sees CHF 1,200 + VAT, and everyone knows where they stand.

Inclusive makes sense in a few specific cases: retail-style pricing, fixed packages where the headline number matters, or B2C work where customers expect "all-in" pricing. If you're not sure, pick additive.

Step 3: Choose Your VAT Tax Method (Effective vs. Flat Rate)

Second decision, and this one depends on what you registered for with the Federal Tax Administration (AFC/ESTV).

• Effective rate: You track VAT collected (on invoices) and VAT paid (on expenses), and you remit the difference. This is the default and what most freelancers use.
• Flat rate (Saldosteuersatz): You applied for this specifically, and the AFC assigned you a reduced industry-specific rate — usually somewhere between 6.0% and 6.5% depending on your profession. You charge clients the normal 8.1%, but you only remit the flat percentage on your total revenue. In exchange, you can't deduct VAT on expenses.

Take Marco, a fictional Ticino-based IT consultant. He chose the flat rate method (6.2% in his case) because he has almost no business expenses — he works from a home office with a laptop and not much else. For him, the flat rate is simpler and cheaper. But for Anna, a fictional graphic designer in Zurich who buys software licenses, hardware, and rents a coworking desk, the effective rate wins because she can reclaim VAT on every one of those expenses.

If you didn't specifically sign up for the flat rate, choose effective. You can also enable a custom VAT rate here if you have an unusual situation, but for 99% of freelancers, the standard Swiss rates are all you need.

Hit save. Setup is done.

Step 4: Apply VAT on an Invoice

Now create a new invoice and add a line item — let's say "Consulting work, 3 hours at CHF 100." With VAT enabled, you'll see a new dropdown on each line: the VAT rate selector.

Pick Normal (8.1%) and the invoice automatically calculates: 3 × 100 = 300, plus 8.1% VAT = CHF 324.30. The VAT appears as its own line, both per-item and as a total, so your client sees exactly what they're paying.

Mixing Multiple VAT Rates on One Invoice

You can apply different VAT rates to different line items on the same invoice. The four rates you'll see are summarized in the grid below.

Just pick the right rate per line and Magic Heidi handles the math. The final invoice groups VAT totals by rate, which is exactly what your client's accountant wants to see.

Overriding VAT Per Invoice

Sometimes you need to override the default. Two big cases:

1. Invoicing a foreign client: Services to a non-Swiss company are typically VAT-free. On that specific invoice, set the VAT logic to no VAT and your invoice goes out clean, with a note that the place of supply is outside Switzerland.
2. One-off inclusive pricing: Maybe you quoted a flat CHF 500 to a client and don't want to add VAT on top. Flip that invoice to inclusive and Magic Heidi backs out the VAT from inside the CHF 500.

Generate the invoice and you'll get a clean PDF with VAT correctly applied per line, a VAT summary, the grand total, and the Swiss QR-bill at the bottom. Ready to send.

Want to try this on a real invoice right now? Create a free Magic Heidi account →, enable VAT, and you can send your first compliant invoice in under five minutes.

Step 5: Track VAT on Expenses

Here's where the effective-rate freelancers earn back their VAT. Every business expense you log can now have a VAT component, and Magic Heidi will calculate how much of that expense you can reclaim.

Go to expenses, click "new expense," and enter the amount — say, CHF 100 including VAT for a software subscription. Pick the VAT rate (normal 8.1% in most cases), and Magic Heidi instantly calculates that CHF 7.50 of that CHF 100 was VAT you can reclaim. Add a category, save it, and you're done.

Imagine Stefan, a fictional Bernese videographer who spends about CHF 2,000/month on equipment rentals, cloud storage, and editing software. Before Magic Heidi, he'd track all of this in a spreadsheet and try to remember to reclaim VAT at quarter-end. Now every expense gets logged in 15 seconds with the VAT auto-calculated, and his quarterly reclaim drops straight into the VAT declaration screen. Over a year, that's roughly CHF 1,800 in VAT he's reclaiming without lifting a finger at quarter-end.

This is the whole reason effective-rate freelancers usually come out ahead: every espresso machine, every Adobe subscription, every coworking invoice puts VAT back in your pocket — but only if you log it.

Step 6: Generate Your Quarterly VAT Return

This is the payoff. Go to the VAT Declaration section in your dashboard.

Choose the quarter you want to file (Q1, Q2, Q3, or Q4). Then pick your accounting basis:

• Invoiced (accrual): VAT is owed when you send the invoice
• Paid (cash): VAT is owed when the client actually pays

Most freelancers use the paid basis because it matches cash flow — you don't owe VAT on invoices the client hasn't paid yet. But check what you registered for with the AFC.

The screen then shows you, for that quarter:

• Total revenue (net of VAT)
• Total VAT collected on invoices
• Total VAT paid on expenses
• The exact number to enter on the federal VAT return website (estv.admin.ch)

And here's the part that surprises new freelancers: it's totally normal for the state to owe you money. If you had a quiet revenue quarter but lots of equipment expenses, your reclaimable VAT can exceed what you collected. Magic Heidi flags this clearly so you know you're getting a refund, not paying.

You can also export the full VAT report to Excel for your records or your accountant. One click, full breakdown, done.

Wrapping Up: Your VAT Setup in Three Minutes

The whole flow is simple: add your VAT number, pick additive + effective, save, then apply VAT per line item on invoices and log expenses with VAT to reclaim input tax. A quick six-step recap lives just below.

That's it. No spreadsheets, no manual math, no quarter-end panic. The whole point of switching to a VAT-enabled tool is to make the tax part invisible, so you can focus on the work that pays you.

Your VAT shouldn't be the thing that slows you down. Get it set up once, set up right, and never think about it again.