Swiss VAT Net Tax Rate Method: When the Saldosteuersatz Pays Off

Swiss VAT gives small businesses a shortcut many never discover: the net tax rate method (Saldosteuersatzmethode). Instead of tracking every input-VAT receipt, you pay a flat percentage of your turnover to the Federal Tax Administration — and keep the difference. Here is how it works and when it actually saves you money.

How the net tax rate method works

Under the standard, effective method, you collect 8.1% VAT on your invoices and remit the difference between that output VAT and the input VAT on your business purchases.

The net tax rate method (Saldosteuersatzmethode, or SSS for short) flips the logic. You still charge your clients the standard 8.1%, but you pay the FTA a lower, fixed percentage of your gross turnover instead.

That fixed percentage — the net tax rate, or Saldosteuersatz — is set by industry. It is designed to approximate the average input VAT a business in your sector normally has.

In exchange for the simplicity, you give up the right to deduct input VAT. Every franc you spend on materials, equipment, or services is simply ignored when you calculate what you owe.

Who can use it — and the two limits

The method is reserved for smaller businesses, and two hard limits apply as of 2026. You must stay under both at the same time.

First, your annual turnover must not exceed CHF 5,024,000, including VAT. Second, the VAT you would pay at your net tax rate must not exceed CHF 108,000 per year.

Exceed either limit and you must move to the effective method. Because the two numbers work together, a high-turnover business with a low rate can hit one ceiling while a small business with a high rate hits the other.

You apply through the FTA portal, and since 2025 foreign companies are no longer eligible — the method is now strictly for Swiss-based businesses.

The rates, by industry

The FTA publishes a table of net tax rates ranging from about 0.1% to 6.8%, and your rate depends entirely on what you do.

Service professions with almost no material costs sit at the top: consulting, trustees, lawyers, architecture, IT, and psychology are around 6.2%, while marketing, web design, and photography sit near 5.9%.

Trades with real material costs sit lower — electricians, carpenters, and painters are around 4.5%, retail and online shops around 2.0%, and food businesses as low as 0.6%.

The pattern is deliberate. The higher your sector's typical input VAT, the lower your net rate, because the flat rate is meant to approximate what you would have deducted anyway.

When it pays off — and when it doesn't

The method is a clear win when your input VAT is low relative to turnover. The classic case is a consultant, coach, IT freelancer, or agency that buys little beyond a laptop and office space.

The rule of thumb is simple: compare your actual input VAT against the gap between the VAT you collect and what you would pay at the flat rate. Stay below that gap and the net tax rate method is cheaper.

It backfires when your input VAT is high — heavy material costs, an investment year with new machinery or a vehicle, or a large share of zero-rated exports all tilt the balance back toward the effective method.

There is also a lock-in to respect: you must use the method for at least one year, and if you switch back you can only return to it after three years. Run the numbers before you commit.