VAT: Standard Rate, Reduced Rate and Exemptions in Switzerland
The Swiss tax system is characterised by a three-tier VAT structure comprising the standard rate, the reduced rate and various exemptions. This tax architecture, governed by the Federal Act on Value Added Tax (FAVAT), constitutes a fundamental element of the Swiss economic landscape. Mastering these different rates and exemption cases represents a significant advantage for companies operating on Swiss territory, allowing them to optimise their tax burden while scrupulously complying with the legal framework. Our law firm accompanies entities of all sizes on a daily basis in navigating this complex system, offering sharp expertise in the correct application of rates and the identification of legally compliant exemption opportunities.
The Three Swiss VAT Rates (since 1 January 2024)
| Rate | Rate since 1.1.2024 | Main Applications | Legal Basis (FAVAT) |
|---|---|---|---|
| Standard rate | 8.1% | Majority of goods and services: construction, professional services, catering, telecommunications, advertising | Art. 25 para. 1 FAVAT |
| Reduced rate | 2.6% | Food, non-alcoholic beverages, medicines, newspapers, books, non-commercial radio/TV, agricultural products | Art. 25 para. 2 FAVAT |
| Special accommodation rate | 3.8% | Hotel nights and para-hotel accommodation, campsites, breakfast included in the room rate | Art. 25 para. 4 FAVAT |
| Zero rate (exempt with right to deduction) | 0% | Exports, cross-border transport, investment gold, transactions for diplomats | Art. 23 FAVAT |
| Excluded from scope (without right to deduction) | N/A | Health, education, insurance, capital markets, residential lettings, gambling | Art. 21 FAVAT |
The Standard VAT Rate in Switzerland: Applications and Particularities
The standard Swiss VAT rate currently stands at 8.1% since 1 January 2024, following an increase of 0.4 points from the previous rate of 7.7%. This change resulted from a reform aimed at stabilising the financing of the OASI (old-age and survivors' insurance).
This standard rate applies to the majority of deliveries of goods and supplies of services carried out on Swiss territory. It constitutes the general rule for VAT, while the reduced rates and exemptions represent exceptions specifically provided for by law.
Scope of the Standard Rate
The standard rate covers a wide range of commercial transactions, including notably:
- Sale of movable and immovable assets not exempt from VAT
- Professional service supplies (consulting, expertise, taxable financial services)
- Building works and construction
- Telecommunications services
- Advertising and marketing services
- Catering and hotel services (excluding accommodation)
The Reduced Rate and the Special Accommodation Rate
Goods and Services Subject to the Reduced Rate of 2.6%
The reduced rate of 2.6% applies principally to:
- Food and non-alcoholic beverages (excluding beverages served in the context of catering services)
- Medicines
- Newspapers, magazines, books and other printed matter without advertising character
- Services of radio and television companies (excluding commercial ones)
- Agricultural, forestry and horticultural products
- Livestock, poultry and fish
The Special Accommodation Rate of 3.8%
The hotel and tourism sector benefits from a special rate of 3.8% applicable to accommodation services including breakfast, provided the latter is included in the room rate. This special rate concerns:
- Accommodation in hotels and para-hotel establishments (including spa establishments)
- Rental of pitches on campsites
- Breakfast, when included in the room rate
Other services provided by accommodation establishments (catering outside included breakfast, spa services, etc.) remain subject to the standard rate of 8.1%.
Transactions Exempt from VAT in Switzerland
Swiss legislation provides for two categories of VAT exemptions: transactions excluded from the scope of the tax (art. 21 FAVAT) and transactions exempt with right to deduct input tax (art. 23 FAVAT). This distinction is of capital importance for registered persons, as it determines their right to recover VAT paid upstream.
Transactions Excluded from the Scope (without right to deduction)
Transactions excluded from the scope of the tax principally concern the following sectors:
- Health services (medical, hospital, care services)
- Social and educational services
- Insurance and reinsurance transactions
- Transactions in the money and capital markets (except wealth management and debt collection)
- Making properties available for residential use
- Betting, lotteries and other games of chance
- Cultural and sporting services under certain conditions
Transactions Exempt with Right to Deduction (zero rate)
Unlike excluded transactions, transactions exempt with right to deduction allow companies to recover input tax. This category includes notably:
- Export of goods and certain services destined for recipients abroad
- Cross-border transport of persons and goods
- Services related to export or transit of goods
- Deliveries of investment gold
- Transactions with international organisations enjoying diplomatic status in Switzerland
Practical Information on Swiss VAT Registration
| Criterion | Detail |
|---|---|
| Registration threshold | Annual taxable turnover ≥ CHF 100,000 |
| Voluntary registration | Possible from the first franc of turnover (to recover input tax) |
| Foreign companies | Registration if worldwide turnover ≥ CHF 100,000 and activity in Switzerland |
| VAT return | Quarterly (effective method) or half-yearly / annual (simplified methods) |
| Simplified return methods | Net tax rate method or flat-rate methods (for small companies) |
| Return and payment deadline | 60 days after the end of the return period |
| Default interest | 4% per annum in the event of late payment |
| FTA audit | In principle every 5 years for ordinary registered persons |
Management of Mixed Transactions and Right to Deduct Input Tax
Many companies simultaneously carry out transactions subject to different VAT rates or partially exempt transactions. This considerably complicates VAT management and requires particular attention regarding the right to deduct input tax.
Input tax corresponds to VAT paid by the registered person on their purchases of goods and services, acquisitions and imports. The right to deduction follows these principles:
- Full deduction for registered persons carrying out exclusively taxable or exempt transactions with right to deduction
- No right to deduction for registered persons carrying out exclusively excluded transactions
- Partial deduction for registered persons carrying out mixed transactions, according to allocation keys
Frequently Asked Questions about Swiss VAT
What VAT rates apply in Switzerland since 2024?
Since 1 January 2024, Switzerland applies three VAT rates: the standard rate of 8.1% (majority of goods and services), the reduced rate of 2.6% (food, medicines, books, newspapers, radio/TV), and the special rate of 3.8% for hotel nights and para-hotel accommodation. These rates were increased by 0.4 points from the previous rates (7.7%, 2.5%, 3.7%) to finance OASI.
Must my company register for Swiss VAT?
VAT registration is mandatory if your annual turnover from taxable services in Switzerland reaches or exceeds CHF 100,000. For foreign companies providing services to Swiss customers, worldwide turnover is taken into account for this threshold. Below the threshold, voluntary registration is possible and may be advantageous to recover VAT paid on your purchases (input tax).
What is the difference between an excluded transaction and an exempt transaction?
This is a crucial distinction: transactions excluded from the scope of the tax (art. 21 FAVAT) are not subject to VAT but do not give the right to deduct input tax, which makes VAT a definitive cost for the company. Transactions exempt with right to deduction (art. 23 FAVAT, zero rate) allow full recovery of VAT paid upstream. Exports benefit from this favourable status.
Is my restaurant subject to the standard or reduced rate?
On-site catering (table service, café, bar) is subject to the standard rate of 8.1%. In contrast, the sale of food to take away is subject to the reduced rate of 2.6%. Accommodation with breakfast included in the room rate benefits from the special rate of 3.8%. If your establishment offers both catering and accommodation, it is essential to distinguish and separately account for the revenues subject to the different rates.
How can PBM Avocats help me with Swiss VAT in Geneva or Lausanne?
Our firm accompanies companies in their VAT registration, the analysis of the rate applicable to their services, the management of mixed transactions (partially exempt activities), the optimisation of input tax deduction and the preparation of quarterly returns. We also intervene during FTA audits and in the event of disputes on the VAT characterisation of specific transactions, notably in the finance, real estate and healthcare sectors.