VAT Guide for Freelancers in Switzerland

Standard VAT rate for freelancers in Switzerland: 7.7%


Regardless of where you’re based if you have clients in Switzerland you have to deal with Swiss VAT rules. VAT in Switzerland is administered by the Swiss Federal Tax Authority and is a consumption tax levied on the purchase of almost all goods and services. While you might already know all that, you might be unaware of the specific rules surrounding your product. 

If you are a freelancer in Switzerland and are confused by VAT and the rules surrounding it, you're in the right place. Here at Xolo, we want to address all your VAT-related queries. In addition, we offer A-to-Z VAT-related services designed as per your individual needs, preferences, and requirements.

VAT rates in Switzerland for Freelancers

The Swiss government levies four different VAT rates, and freelancers must charge the amount that applies to their products and services:

  • Standard VAT rate of 7.7% - Applied on all taxable goods and services that don’t fall under the reduced and zero VAT rates. 
  • Reduced VAT rate of 3.7% - Applied on overnight stays in hotels including breakfast.
  • Reduced VAT rate of 2.5% - Applied on foodstuffs, non-alcoholic beverages, books, newspapers, magazines, medicines, cultural and sporting events, and so on.
  • The Zero Rate - When items are zero-rated, they are still VAT-taxable, but the rate of VAT you must charge your consumers is 0%. This rate applies to some exports, and supplies of certain goods and services to airlines. Although there are no charges on zero rates, you should record sales of goods and services and create a report based on your returns.
     

Some services like insurance, financial services, education, health, etc. are exempt from Swiss VAT. 

When Should you Register for VAT in Switzerland as a Freelancer?

The VAT threshold in Switzerland is currently CHF 100,000, which means that your taxable sales revenue should exceed CHF 100,000 before you need to register for VAT. If your sales revenue is currently below CHF 100,000, registering for VAT is optional. 

You can register for VAT as soon as you start making purchases or start selling/providing your services. If you wish to register voluntarily, you have the option of registering at the same time as you start your business, or later. 

If you have not registered voluntarily, you need to apply for VAT registration no more than 30 days after your sales revenue reaches 100,000 CHF to avoid penalties.

How to Register for VAT in Switzerland as a Freelancer

Freelancers who earn more than CHF 100,000, and don’t provide services that are part of the aforementioned exempt sectors, are subject to VAT. The registration process is fairly simple and only involves completing a basic online questionnaire (which holds legally binding information), appointing a fiscal representative in Switzerland, and placing a bank guarantee or deposit on behalf of the Swiss tax authorities. You can then register for VAT online directly through Switzerland’s Federal Tax Administration webpage. The website also provides the conditions of liability so you can check if you meet them before registering for VAT. You should declare your profits as income, and include them in your overall taxable income. 

You will receive a VAT registration number, which establishes you in the Switzerland tax system. This number is used to track the taxes you pay, the tax credits you receive, and the tax you charge from customers. 

VAT for Expat Freelancers in Switzerland

A work permit is a requirement for any foreign national looking to begin their own sole proprietorship in Switzerland. However, obtaining a work permit in Switzerland depends on whether you have the right skills, what country you are from, and the quotas available. 

EU and EFTA citizens can stay in Switzerland as self-employed individuals by applying for a B Permit, which is valid for five years, as long as you can prove financial independence and sustainability to survive on being self-employed. Expats from other countries have to meet the Swiss labor market requirements, which are relatively strict and complicated, to be approved for a self-employment work permit.

Once you acquire a work permit, freelancers who earn more than CHF 100,000 are liable to register for VAT. You must inform the Federal Tax Administration and register for VAT through their webform.

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Legal Obligations for VAT Registered Freelancers in Switzerland

After registering for VAT, you must make sure to:

  • Charge the correct VAT rate
  • Pay any VAT owed to the tax office
  • File VAT returns
  • Maintain VAT invoices and a VAT account
  • Use only approved foreign currency rates

 

VAT invoices are the official record of how much tax you charge and collect, and therefore the official proof of how much tax you owe the government. In order to fully comply with VAT laws, you must make sure to include the following on your invoices to customers in Switzerland:

  • Your business name and address
  • Your business VAT number
  • Invoice date
  • Invoice sequencing number
  • Description of the goods or services
  • Rate of VAT applied to each item
  • The total amount including VAT

These invoices must be issued within six months of delivering your product or service and you must then store these invoices for ten years. Xolo can help with this! We automatically generate, send, and store all your invoices digitally, so you won’t have to worry about misplacing them over the next decade.

Staying VAT-compliant as a Freelancer in Switzerland with Xolo

Learning and complying to all the Swiss VAT guidelines can be challenging and time-consuming if you do everything on your own as a freelancer. And we believe with help from solutions like Xolo, you'll get your way to success faster and make sure all the obligations and requirements with VAT are met. With Xolo Go, you can enjoy the benefits of having a company without having to register one. We'll give you intuitive tools to create and send VAT-compliant invoices and stay on top of your financials.

If you plan to open a business and run it by yourself, Xolo Leap will help you open a EU-based company with Estonian e-Residency which you can manage from anywhere on the planet, even Switzerland. With Xolo Leap, VAT calculation, collection, and declaration will be handled automatically.

Let's forget about VAT complexities and enjoy the fun parts of freelancing in Switzerland with Xolo!

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