Reverse charge VAT: tax on services from abroad

What is reverse charge VAT?

Reverse charge VAT (Bezugsteuer) is owed when you purchase services from a company based abroad and use them in Switzerland. Because the foreign provider doesn’t pay Swiss VAT, the Swiss VAT Act makes you the tax debtor: you declare the VAT yourself and pay it. This applies whether or not you are VAT-registered.

When is it triggered?

Reverse charge VAT applies when you purchase a service from abroad (not goods) and the place of supply under VAT rules is Switzerland. If you are VAT-registered, it applies from the first franc. If you are not, it applies once such purchases exceed CHF 10,000 in a calendar year — and then on the whole amount, not just the part above the threshold. Common examples: SaaS subscriptions from US companies, consulting by a German freelancer, advertising on Google or Meta, server hosting abroad.

How is it calculated?

You declare the reverse charge on your VAT return. For effective reporting: apply the standard VAT rate to the invoice amount and declare it as input tax (which you can deduct simultaneously if the service is for your business). For net tax rate reporting: reverse charge VAT is generally not deductible, which means services from abroad are effectively 8.1% more expensive for you than domestic ones.

What if I'm not VAT-registered yet?

If you are not VAT-registered and your purchases of services from abroad exceed CHF 10,000 in a calendar year, you owe reverse charge VAT on the whole amount. You don’t have to register for VAT: you report in writing to the FTA and receive a separate return that you file once a year. This catches many sole proprietors off guard.