Your clients are abroad. Does your Swiss business still need to register for VAT?

Alex runs a consulting business in Geneva, with clients in London, Paris and Munich. Because most of his revenue comes from abroad, he assumes Swiss VAT registration does not apply to him.

This may be an understandable assumption. Yet two questions need to be kept separate when running a company in Switzerland: must the business register for VAT and should a particular invoice carry Swiss VAT? Registration looks at relevant turnover; invoicing depends on the nature and place of each supply.

Let's delve deeper into some of the most practical questions that arise when considering whether to register for VAT and how to avoid some costly mistakes.

Does foreign revenue count towards the threshold?

For a business established in Switzerland, the general registration threshold is CHF 100.000 of relevant annual worldwide turnover. Revenue from foreign clients counts alongside Swiss revenue. The same threshold applies to companies and self-employed sole traders.

Turnover means revenue excluding VAT, before expenses, not profit. Activities excluded from VAT, such as qualifying healthcare, education and insurance services, do not count towards the threshold. A consultancy may therefore need to register even if all its clients are abroad.

When does registration become mandatory?

A new business doesn't have to wait until it has invoiced CHF 100.000 before registering for VAT. If relevant turnover is expected to reach that amount within the upcoming 12 months, liability begins from the start of activity. If the initial outlook is genuinely uncertain, the estimate must be reassessed after three months at the latest.

For example, contracts worth CHF 150.000 over 12 months may trigger registration from the outset, even if only CHF 25.000 will be invoiced before December ends.

An existing business that crosses the threshold generally becomes liable from the beginning of the following business year. Turnover for a partial business year is annualised.

A forward-looking assessment also applies when taking over another business or opening a new activity. Once liability begins, registration with the Swiss Federal Tax Administration (FTA) is required within 30 days and is completed online.

Which invoices actually carry Swiss VAT?

For ordinary consultancy and similar professional services, the general rule is that the service is supplied where the client is based, or at the relevant permanent establishment receiving it. Advice provided to a company in Paris is therefore generally supplied in France and invoiced without Swiss VAT.

Local VAT obligations must still be considered. Business clients in the EU and UK generally account for VAT under their country's reverse-charge rules. Foreign supplies must also be reported on Swiss VAT returns, with contracts and invoices supporting the customer's location.

Not every service follows this rule. Property-related work, in-person services, events and accommodation can require different treatment. The actual service matters, not simply the nationality of the customer.

Consider the following illustrative forecast for a Swiss consultancy. All engagements are ordinary consultancy services supplied to business clients, and revenue excludes VAT.

Client location	Revenue (CHF)	Swiss VAT
Geneva	30.000	8,1 percent
Paris	70.000	None
Munich	60.000	None
London	40.000	None
Total	200.000	On CHF 30.000 only

With CHF 200.000 of relevant worldwide turnover, the business must register. Yet only CHF 30.000 attracts Swiss VAT: CHF 2.430 at the standard 8,1 percent rate. Registration and invoicing treatment are different questions, not contradictory results.

Can voluntary registration help lower business costs?

Under the effective method, registered businesses may recover input VAT on qualifying business purchases, including costs connected with foreign services that would have been taxable if supplied in Switzerland. A consultancy charging little Swiss VAT may therefore recover VAT on professional fees, equipment and other eligible expenditure.

This is not an automatic entitlement to recover every amount. The costs must support an eligible business activity and be supported by appropriate invoices. Private use and activities excluded from VAT can restrict deductions.

A business below the threshold can register voluntarily, but must maintain that choice for at least one tax period. Whether it is worthwhile depends on the clients, pricing and recoverable costs. The net tax rate method, unlike the effective method, does not permit separate input VAT deductions.

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What if you buy services from abroad?

Foreign suppliers deserve attention too. When a Swiss business buys qualifying services from a foreign supplier not registered for Swiss VAT, it may have to account for acquisition tax, also called the Swiss reverse charge.

A registered business declares this tax and may deduct it as input VAT where entitled. The result can be neutral, but reporting remains necessary. A non-registered business must also declare and pay acquisition tax when qualifying purchases exceed CHF 10.000 in a calendar year, notifying the FTA within 60 days after year-end.

A practical review before the next invoice

Before finalising upcoming client contracts and annual budgets, conduct a quick structural VAT audit:

1. Calculate relevant worldwide revenue: Add domestic and foreign service turnover to confirm threshold status.
2. Review invoicing setup: Ensure accounting software correctly tags cross-border transactions as zero-rated/out-of-scope while retaining proof of customer location.
3. Track foreign purchases: Monitor vendor invoices from outside Switzerland to anticipate acquisition tax obligations.

Late registration can result in retroactive tax assessments, back-dated interest charges and penalties on historical domestic sales. Establishing clear VAT protocols early ensures seamless cross-border operations as your business expands internationally.