VAT Made Easy: What Sole Proprietorships Need to Know

Once a sole proprietorship in Switzerland achieves an annual turnover of more than CHF 100,000, it becomes subject to value added tax (VAT). This means that you must register your business with the Swiss Federal Tax Administration (SFTA) and regularly submit VAT returns. But don’t worry – there are simplified rules that make getting started easier.

When does VAT become relevant?

VAT liability begins as soon as your total turnover – including revenue from abroad – exceeds the threshold of CHF 100,000. The following steps are then required:

• Registration of your sole proprietorship with the SFTA
• Issuing invoices showing VAT separately
• Regular submission of VAT returns (usually quarterly)

Simplified accounting with the flat-rate tax method

For many sole proprietorships, accounting using the flat-rate tax method is an attractive option. This simplified procedure requires you to remit only a fixed percentage of your turnover to the tax authorities – without having to record each individual input tax.

Advantages of the flat-rate tax method:

• Less administrative effort: No need for detailed input tax tracking
• Simple calculation: Fixed percentage instead of complex calculations
• Time savings: Less bookkeeping effort, more focus on your core business

Example:

Assume you provide services and apply a flat-rate tax of 6.5%. With an annual turnover of CHF 100,000, you pay only CHF 6,500 VAT to the tax authorities – without complicated input tax calculations.

How to prepare optimally:

• Use tools: Accounting software such as Effizo helps you calculate VAT correctly and prepare returns.
• Keep an overview: Maintain accurate documentation of your income and expenses.
• Plan reserves: Set aside the estimated VAT in good time to avoid payment difficulties.

VAT accounting may seem complicated at first, but with the right preparation and the right tools, it quickly becomes a routine task.