VAT Guide for Freelancers in Switzerland

VAT rate: 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.

What are the VAT rates in Switzerland?

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?

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?

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. 

Alternatively, you can hire an accountant (or agency) to handle all your VAT returns and dealings with the FTA. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have.

VAT Guide 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.

Switzerland requires that you sign up for VAT through a local tax representative. Xolo can help you register as a freelancer in Switzerland and handle all the necessary paperwork on your behalf. With Xolo Go, you can use a slice of our company as a legal framework to invoice your clients whether they're across town or across an ocean. 

Financial Obligations of 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.

How Xolo Can Help?

Learning all the Swiss tax guidelines can be challenging, especially if you’re a sole proprietor and in charge of several aspects of your business. Luckily, at Xolo, we offer a range of solutions that can handle all the paperwork and legal jargon, allowing you to focus on your core competencies.

Xolo Go is a quick and efficient way for freelancers who may or may not have a registered LLC or sole proprietorship to invoice clients legally. 

  • Signing up takes only 10 minutes, and once you do, taxation, corporate compliance, and all the tricky VAT calculations are all automatically taken care of in the background!
  • We charge a flat rate of 5% from every withdrawal to your personal bank account. No surprise fees, no contracts, and no BS.

Xolo Leap is the easiest and most effective way to create your own company through Estonian e-Residency! Reduce time spent on mundane business administration and focus on what you do best!

  • We offer different tiers of service depending on the solopreneur's (or as we call them, Xolopreneur's) individual needs.
  • Once you get your business set up with Xolo Leap, you can literally run it from anywhere in the world! So whether you’re a freelancer looking to gain access to the EU market or a digital nomad who can’t be tied down - this is the place for you!

     

So connect with us immediately, and we’ll help you get your one-person business up and running in Switzerland in no time!