VAT obligation: when must a sole proprietorship register for VAT?

The revenue threshold

You become liable for VAT as soon as you generate CHF 100,000 or more in revenue from taxable services within 12 months — not per calendar year, but in any rolling 12-month period. The crucial point: it's revenue, not profit. Even if your expenses consume most of it, the threshold still applies.

Registering for VAT

You must register with the Federal Tax Administration (FTA) within 30 days of exceeding the threshold. You'll receive a VAT number, which must appear on all your invoices from that point onward. Late registration triggers back-payment of VAT for the period since you crossed the threshold — with interest.

Net tax rate method: the simple route

As a sole proprietor, you can use the net tax rate method (Saldosteuersatzmethode). Instead of calculating VAT on every individual transaction and deducting input VAT on every purchase, you apply a flat rate to your total revenue. This rate depends on your industry — typically between 0.1% and 6.5%. The advantage: far less administrative work and, in many cases, a lower tax burden.

Effective method: the precise route

Under the effective method, you calculate VAT on every invoice and deduct VAT from every expense. This is more work but can be worthwhile if you have high input VAT (e.g., if you purchase a lot of goods or services from VAT-registered Swiss companies).