VAT liability

VAT: definition of entrepreneurial activity

Any enterprise, whether or not it is profit-making and regardless of its legal structure, may be liable for VAT. Entrepreneurial activity, whether commercial or professional in nature, is regarded as such as soon as the enterprise is operated independently with the aim of generating lasting income through the provision of services.

A commercial or professional activity…

An activity is considered commercial or professional when the goods produced or services supplied are intended to be consumed by third parties for private purposes or to be exchanged on the market. In this context, the activity must generate revenue, even if it does not necessarily lead to profits.

On an independent basis…

To be regarded as an independent activity, the enterprise must provide services in its own name, bearing the economic and entrepreneurial risks and enjoying complete autonomy in management and work organisation. Traditional employees are not included in this category.

This concept is complex to define. According to the FTA (Federal Tax Administration), you are considered to carry on an independent entrepreneurial activity when you:

• make significant investments,
• own your own business premises,
• employ your own staff,
• share in the profits and bear the losses.

Here are some examples of activities that may be considered independent:

• A sports club organising an annual party and charging an entry fee,
• A person who regularly buys and sells goods on an auction platform,
• An artist who sells advertising space in exchange for consideration,
• An athlete who makes a profit,
• A consortium active in the construction sector.

VAT: revenue of at least CHF 100'000 or CHF 250'000

The obligation to register for VAT applies to a business operator when revenue from taxable supplies during its financial year reaches at least CHF 100'000. For non-profit or public-interest organisations (such as cultural and sports associations, social enterprises, foundations, etc.), this threshold is set at CHF 250'000.

VAT liability: what is the timeline?

From the start of your entrepreneurial activity, the takeover of a business or the opening of a branch, you are required to register for VAT if you expect your turnover to exceed the threshold of CHF 100 000 in the first year.

If you cannot determine with certainty whether your turnover will reach this threshold when your activity starts, you must make this estimate within 3 months of its start.

In any case, you must register in writing with the Federal Tax Administration within 30 days.