Settlement tax rate — What is that?
The settlement tax rate serves to simply the accounting of the VAT for a company. Depending on the sector, the settlement tax rate can differ significantly.
Settlement tax rate
The settlement tax rate simplifies the accounting of the VAT in that the input tax does not need to be calculated. The settlement tax rate method can only be used by those who do not exceed an income of CHF 5,020,000 annually and the taxable activities don’t exceed CHF 109,000.
Level is dependent on the sector
The effective level of the settlement tax rate (SSS) fluctuates between o.1% and 6.7%. An example of a business that receives a low rate would be a newspaper publisher, while the highest rates can be found applied to jobs like stone masonry, which is purely labor intensive. The level of the settlement tax rate varies depending on how large the added value of the labor on the purchased raw materials is.
To become subject to the SSS-method, it is necessary to send a written request the Swiss Federal Tax Authority (ESTV). The accounting occurs in 6-month intervals.
Important: When billing clients, it is necessary to show the legally required tax burden and not the federally approved settlement tax rate! Persons who already want to use this method from the very beginning, must communicate this fact to the ESTV within 60 days of receiving the VAT identification number. Should this not occur, one must wait at least 3 years before being able to switch to the SSS method.
Further information about settlement tax rates can be found on the homepage of the Swiss Federal Tax Authority.
