As long as the company does not achieve a turnover in Switzerland of at least $ 100,000, it is not necessarily liable. A very important condition is that this turnover is carried out with individuals or companies having their domicile or registered office in Switzerland. This means that if your company makes, for example, the equivalent of $ 200,000 outside Switzerland and only $ 50,000 with customers in Switzerland, it is not necessarily subject to VAT.
The great dilemma of the first year of operation
It is rare that you create your business at the beginning of the year. The first calendar year will therefore be incomplete and here you have to be very careful. Let’s say, for example, that I start my activity in May. The amount that we must not exceed and thus not be affiliated with VAT is not $ 100,000 but 7/12 of 100,000 or 58’333 by the end of the ‘year.
- This is where the dilemma sets in: if we do not register for VAT and then exceed this amount before the end of the year, we will be affiliated retroactively when I start my activity.
- We should therefore pay VAT on my turnover since the start of my activity even though we have not invoiced it to my clients: a painful discussion in perspective or a deadweight loss. If during the 2nd calendar year of existence, you exceed $ 100,000 in turnover, you will be compulsorily affiliated from the following year. Using the tax return calculator is the right solution there.
Simplified statement or detailed statement?
You have the choice between two methods of calculating the VAT you will pay:
- The VAT statement with the normal and detailed method
- The net tax debt rate method or as we call it the “simplified count”
In the normal VAT settlement, you must, on the one hand, calculate the cumulative amount of all the invoices that you have paid with VAT and on the other hand the turnover of all the invoices received or issued with VAT. You have the VAT paid on one side and the VAT collected on the other. You pay the difference in VAT.
To do this settlement, you will therefore need to classify your invoices paid by the VAT rate applied, as well as those that you have issued or collected. In short, to avoid doing the job twice, you will need to make the journal entries quarterly.
The simplified count is more approximate, but simpler and faster
No need to detail the invoices issued or received and the invoices paid, this simplified statement is only based on your turnover received or the invoices issued. The rate applied to this turnover depends on the type of your activity. For example, the activities of manufacturing and selling food products will have a rate of 0.1% to pay on their turnover, a metal construction company 3.5%, an advertising agency 5%, a service provider such as a consultant 6% etc.