Net tax rate or effective method – which suits you?

When you become liable for VAT, you have to choose an accounting method – and that choice binds you for years. Here are the rules, a worked example and the questions you should ask yourself beforehand.

By Gabriel Bosnjak · Updated 11 October 2026 · 6 min read

In short

You generally become liable for VAT once your turnover reaches CHF 100,000 a year. Since 2024, the rates have been 8.1%, 2.6% and 3.8%.
With the effective method, you deduct all the input tax you have paid from the tax on your turnover. You file returns quarterly.
With the net tax rate, you multiply your turnover by a rate that the SFTA sets for your sector. This covers input tax at a flat rate. You file returns half-yearly.
The net tax rate is available up to CHF 5,024,000 in turnover and CHF 108,000 in tax a year.
If you have chosen the effective method, you can switch to the net tax rate after three years at the earliest.
Since 2025, with turnover of up to CHF 5,005,000, you can apply to file only once a year – with either method.

Who has to account for VAT

You become liable for tax if you generate turnover of CHF 100,000 or more a year from supplies that are not excluded from the tax – in Switzerland and abroad combined (Art. 10 VATA). Below that, you are exempt from tax liability, but you can register voluntarily.

Since 1 January 2024, three rates have applied: 8.1% as the standard rate, 2.6% as the reduced rate (for example for food and books) and 3.8% for accommodation.

The effective method

You account for the tax on your turnover and deduct the input tax – the VAT you yourself have paid on materials, goods, services and investments. To do this, you need a receipt showing the VAT for every expense.

Returns: quarterly. On application, monthly if you regularly have more input tax than tax due, or annually (see below).
Advantage: you pay exactly the tax on your added value. Investments and purchases of goods reduce the tax straight away.
Disadvantage: more work – every input tax amount must be documented, posted and assigned to the right box.

The net tax rate method

You multiply your turnover including VAT by the net tax rate that the SFTA sets for your activity. You do not record input tax item by item – it is already factored into the rate as a flat amount.

Limits: no more than CHF 5,024,000 in turnover from taxable supplies and no more than CHF 108,000 in tax a year, calculated at your net tax rate (Art. 37 VATA).
Returns: half-yearly – or annually on application.
Several activities: since 2025, you need a separate rate for each activity that accounts for more than 10% of your turnover – even if that means more than two. The former 50% rule for mixed businesses no longer applies.
Approval: you apply to the SFTA for the method, and the SFTA approves the rate.

The catch: you do not deduct the input tax you have paid. If you buy an expensive machine or a large amount of goods, you may end up paying considerably more with the net tax rate.

A worked example

A consultancy has annual turnover of CHF 216,200 including 8.1% VAT. This contains CHF 16,200 in tax (216,200 × 8.1 ÷ 108.1). It has paid CHF 2,400 in input tax on a laptop, software and phone. For the net tax rate, we assume an example rate of 6.2% – the SFTA determines which rate applies to your activity.

	Effective method	Net tax rate (example: 6.2%)
Normal year	16,200 − 2,400 = CHF 13,800.00	216,200 × 6.2% = CHF 13,404.40
Year with an investment of CHF 54,050 (including CHF 4,050 VAT)	13,800 − 4,050 = CHF 9,750.00	unchanged at CHF 13,404.40

In a normal year, the net tax rate is slightly cheaper and means less work. In the year with the investment, however, the consultancy pays around CHF 3,650 more with it. That is exactly why it pays to look ahead over the next three years.

Which method suits you?

The net tax rate is more likely to suit you if …

you mainly sell your work and buy in little,
no major investments are planned in the next few years,
you want to save effort – two returns a year instead of four, without itemising every input tax amount.

The effective method is more likely to suit you if …

you buy in a lot of goods or materials,
you invest – in vehicles, machinery, renovations,
you export a lot: exports are exempt from the tax, and you can still deduct the input tax on them,
at the start, you have more input tax than tax due and get money back.

Work through both options using your figures from the last twelve months – and with what you are planning for the next three years. If in doubt, your fiduciary can help.

Switching: deadlines and consequences

You must keep the net tax rate for at least one tax period. If you choose the effective method, you can switch to the net tax rate after three years at the earliest (Art. 37 para. 4 VATA).
You notify the SFTA of a switch no later than 60 days after the start of the tax period, i.e. by the end of February. If you notify it later, the switch only applies from the next tax period.
If you are newly liable for tax, you notify the SFTA of your choice of the net tax rate within 60 days of receiving your VAT number.
If you exceed the limits, you must switch to the effective method. Exactly when is set out in Art. 81 of the VAT Ordinance – if your turnover jumps sharply, ask the SFTA or your fiduciary early.
A switch can cost you money or bring money in: if you switch to the net tax rate, you repay input tax on the current value of your goods. If you switch to the effective method, you can claim the tax on the current value.
You can change the method online in the SFTA’s ePortal.

New since 2025: filing once a year

Since 1 January 2025, with turnover of up to CHF 5,005,000, you can apply to file only once a year – with either method.

Requirement: your returns for the last three years were submitted on time and paid in full.
Application: in the ePortal, no later than 60 days after the start of the tax period. If you are newly liable for tax, you have 60 days from receiving your VAT number.
Instalments: the SFTA sets instalments – three with the effective method (30 May, 30 August, 30 November), one with the net tax rate (30 August).
Return: submit it by the end of February of the following year and pay the balance.

Fewer deadlines do not mean less bookkeeping: your receipts still have to be in order throughout the year, or things get tight in February.

How Buchify helps

Buchify calculates your VAT return from your entries – effective method or net tax rate, agreed or received consideration, with the boxes of the SFTA form. The return is reconciled against the revenue accounts, and a period that has been reported is locked. For now, you still submit it yourself in the ePortal or through your fiduciary.

View the demo VAT in Buchify

Sources

All sources accessed on 11 October 2026. General information, not tax or legal advice. The law and the requirements of the authorities and banks are what count – for your specific case, your fiduciary can help.

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