The Right Deduction of the Taxes in the Application

For the occurrence of the sales tax and the correct application of the tax rate, it depends on when the service has been carried out. The application of the relevant tax rate is independent of whether the entrepreneur makes his sales according to the payments received (actual taxation) or according to the agreed Remuneration (target taxation) is taxed, it is only important when the corresponding service is carried out according to sales tax regulations. The receipt of down payments or advance payments is also irrelevant for the final amount of sales tax. Go for the online tax services in this case.

For us this means:

  • For us, only the date of completion is decisive for the tax rate.
  • If your project is handed over to you and accepted by you during the period of the reduced VAT, the reduced tax rate counts both for the final invoice and retrospectively for payments made so far.
  • If your project is only handed over to you and accepted by you after the period of reduced VAT, the regular tax rate of 19{bcdc0d62f3e776dc94790ed5d1b431758068d4852e7f370e2bcf45b6c3b9404d} applies to the entire construction project, including any payments made during the period of reduced tax.
  • It should be noted that the invoice date is usually not to be equated with the date of completion.

Swiss value added tax is an indirect tax and is levied by the federal government. But why is a value added tax necessary? The basic idea behind it is simple: every consumer should support the state financially. For the sake of simplicity, a tax is levied on the companies so that not every citizen has to invoice their consumption individually. They then pass this on to the consumer – including VAT in the price. What exactly is taxed? According to the Swiss Federal Tax Administration (FTA), tax objects are “all services that are provided in Switzerland for remuneration and for which the law does not provide for any exception.”

Which VAT rates apply?

The standard VAT rate is 7.7{bcdc0d62f3e776dc94790ed5d1b431758068d4852e7f370e2bcf45b6c3b9404d} of sales; it applies to most products and services. A reduced tax rate of 2.5{bcdc0d62f3e776dc94790ed5d1b431758068d4852e7f370e2bcf45b6c3b9404d} applies to everyday goods such as groceries, newspapers or medicines, and a special rate of 3.7{bcdc0d62f3e776dc94790ed5d1b431758068d4852e7f370e2bcf45b6c3b9404d} applies to hotel accommodation.

The above VAT rates apply since 01/01/2018. We answer the most important questions and summarize the changes in an understandable way in another article . You can also find additional information on the FTA website.

VAT liability: who has to settle VAT?

The VAT obligation depends on the annual turnover: All companies with more than $100,000 turnover per year are generally obliged to pay VAT and must either settle it effectively or with the help of net tax rates (SSS). Companies with a lower annual turnover are exempt from the obligation. The legal form of a company (such as GmbH, AG or sole proprietorship) has no influence on this.

VAT settlement with input tax? Declaration and calculation of input tax

The easiest way to show input tax and how it is calculated is with an example: A carpenter purchases wood worth CHF 100 and pays the forest owner CHF 108 (VAT: CHF 8). He then uses the wood for a customer order, which he passes on for CHF 216 (VAT: CHF 16). In order to offset tax accumulation, i.e. the excessive taxation, he may deduct the input tax to the Federal Tax Administration (FTA): In other words, the VAT that he paid when he bought wood (CHF 8). In this example, the carpenter pays “only” CHF 8 or 4{bcdc0d62f3e776dc94790ed5d1b431758068d4852e7f370e2bcf45b6c3b9404d} VAT.