Benefits of VAT in Switzerland

The beautiful country of Switzerland is a double threat. It not only has beautiful and scenic landscapes but also has an easy taxation process, a flexible government that understands the needs of the foreign businessmen and entrepreneurs and has very low rates of taxation. The ever-increasing amount of funds entering and exiting the country led the government to imply VAT on the various transactions done in the country.

The implication of VAT in Switzerland turns out to be very helpful to both, the economy of the country and the customers. The companies will forward the said tax as Value Added Tax and each stage in the buying cycle would add a percentage of VAT to the product.

Let’s know more about VAT and its various benefits.

What is VAT?

Value Added Tax or VAT is a type of tax which is implied on any product in the case any sort of value is being added to the product. At every stage of adding the value to the product, the VAT is applied to the product. It is a consumption tax and the final burden of the tax is borne by the customer. The rate of the Value Added Taxes in Switzerland depends upon the type of product the customer is buying. The VAT was implemented in the year 1995 in Switzerland but the VAT law was later revised. The revised VAT law came into effect on the 1st of January 2018. The revised rates of taxes are given below:

Switzerland VAT Rate


Standard Rate (Cars, watches, jewellery, clothing, alcohol and other services)


Special Rate (Overnight stays in hotels including breakfast)


Reduced Rate (Foodstuffs, books, newspapers, medicines, other everyday consumer goods)



Who needs to be concerned about VAT?

According to the revised VAT law, in case the company has a global turnover of more than CHF 100,000, the company will then have to get itself registered with the Federal Taxation Authority. This amendment will have a humongous impact on the companies which want to conduct business in the country.

The implementation and revision of VAT would also give confidence to the foreign companies coming to Switzerland that the government of the country is actually looking out for the companies being setup in the country.

Let’s now understand the various benefits of VAT in Switzerland.

Benefits of VAT in Switzerland

With the implementation of VAT, Switzerland showed that it cares about the economy of the country and the various foreign businesses that are being setup in the country. With the revision of the VAT laws, Switzerland is making a statement that it has a compassionate attitude towards the foreign companies being setup in the country and is constantly checking and updating the laws according to the need of the businesses.

The various benefits of VAT in Switzerland are as follows:

1.Low VAT Rate

The rates at which VAT is applied to the products have been reduced further to a range of 7.7% - 2.5%. In comparison to other European countries, this rate is very low. It is very beneficial for the customers and provides steady revenue for the economy of the country.

2.Prevents Double Charging

The VAT is applicable to the product at every stage in which any value is added to it and the amount of any previous tax is refunded back to the person. This method prevents charging tax on the same product to more than one entity.

3.Simple and Transparent

It is required of the seller to disclose the amount of taxes paid previously on the product. This would increase the transparency of the VAT procedure and will allow the authorities to better track if any company is indulging in any type of fraudulent activity or is trying to evade tax altogether.

4.Less Incentive to Evade Tax

Traditionally, the government is affected totally if any company or individual tries to evade tax but in the VAT system of taxation, avoiding the tax at any single stage would not allow him to evade taxes. This would make the evasion of taxes less beneficial for an entity.

The various advantages of VAT in Switzerland can prove to be very advantageous to the various entities in the country, whether an individual or a company. The VAT can be very complex to calculate and tedious to follow up and thus, it is a suggestion that after starting a business in Switzerland, you use the services of a reputed firm which can handle all your VAT related queries for you and provide you with a solution which would help you to stand out amongst your competitors.

One of such auditing and accounting firms is “Business Setup Worldwide” which will not only handle all your VAT and tax related problems but will also provide various other services such as accounting and bookkeeping, auditing, payroll etc. If you want to know about our various services do contact us, we would be happy to help.

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