Effective method or net tax debt rate: how to choose, and when you can switch back.
Rates, ceilings and deadlines verified on 21 September 2026.
On paper both methods produce the same tax. In practice they produce very different amounts. The choice comes down to two figures you already know: what you collect, and what you pay to VAT-registered suppliers.
What each method does
Under the effective method, you declare the VAT collected on your sales and deduct the VAT paid on your purchases. You track both, and you pay the difference. It is the default method.
Under the net tax debt rate, you apply a single flat rate to your turnover and deduct nothing. The authority has calculated that rate by industry, assuming an average level of VAT-bearing costs. You still invoice your customers at 8.1%, but you only pay over the flat rate.
The calculation that decides
It fits in one sentence: if your actual deductible VAT is greater than the gap between 8.1% and your flat rate, the effective method is cheaper.
- Many purchases from VAT-registered Swiss suppliers, equipment, subcontractors: the effective method almost always wins.
- Mostly in-house labour, few purchases, costs carrying no VAT such as salaries, rent or insurance: the flat rate wins.
- A major investment during the year: the effective method recovers the VAT on it, the flat rate does not.
The calculation is done on your actual figures, not on an industry average. That is exactly what we do before recommending one or the other.
The ceilings you must not cross
The net tax debt rate method is not open to everyone. Two annual limits apply at the same time.
- CHF 5,024,000 of turnover from taxable supplies.
- CHF 108,000 of tax due per year, calculated at the applicable flat rate.
Crossing either one takes you out of the scheme. The move has to be prepared, because it changes how the books are kept: input VAT has to be tracked again, account by account.
The switching deadlines
You cannot change method whenever you like, and that is the most common trap.
- From the effective method to the flat rate: after three tax periods at the earliest.
- From the flat rate to the effective method: after one tax period at the earliest.
- In both cases the request goes in writing to the Federal Tax Administration, within the deadlines it sets.
In other words, a wrong initial choice is paid for over three years. Which is why the calculation is worth doing properly once, rather than redoing it every year.
What neither method changes
The registration threshold stays the same: CHF 100,000 of annual turnover, CHF 250,000 for non-profit sporting or cultural associations and charitable institutions.
The filing deadline stays the same: sixty days after the end of the period. And the customer invoice stays the same: you charge the statutory rate, 8.1% standard, 2.6% reduced, 3.8% for accommodation.
Does the flat rate save time?
Yes, and that is its real argument. There is no input VAT to track, so less entry, less checking, and a shorter return. In a small structure the time saved can outweigh a slightly higher tax. It is a trade-off to make in francs, not on principle.
Can I invoice 8.1% while on the flat rate?
You must. The flat rate is an arrangement between you and the authority; your customer pays and deducts the statutory rate. Invoicing the flat rate is a classic mistake, and it is corrected invoice by invoice.
What if my industry rate does not match what I do?
A business with several activities can be given two flat rates. If the real split differs from what was declared, it has to be corrected, without waiting for an audit.
What if I chose the wrong method two years ago?
You cannot switch back immediately, but you can prepare the move and, above all, quantify what it will save you. That is a calculation we make on your filed returns, not on assumptions.
We calculate on your figures, not on an average.
Give us your latest returns and your cost structure. We will tell you which of the two methods costs you less, and by how much.