VAT
Swiss VAT net tax rate method: TDFN rules, calculations and comparisons
The Swiss net tax rate method can simplify VAT reporting, but it does not guarantee a saving. Known as taux de la dette fiscale nette (TDFN) in French and Saldosteuersatz in German, it applies an approved industry rate to VAT-inclusive taxable turnover. Compare the rules, your purchases and investments before choosing it.
By Sarah Prieur · Swiss certified accountant
At a glance
Key takeaways
- Both general limits must be met: CHF 5,024,000 of annual taxable turnover including VAT and CHF 108,000 of tax calculated using the net rates.
- Invoice customers at the statutory VAT rate, not the net tax rate.
- Apply the approved net rate to VAT-inclusive turnover, not net sales.
- Since 2025, more than two net rates are possible and method changes involve residual-value adjustments.
Who can use the net tax rate method?
The method is available with FTA authorisation to eligible businesses. Both limits apply together, subject to exclusions and the specific rules for entering or leaving the method.
| General condition | Limit | Measurement |
|---|---|---|
| Annual taxable turnover | CHF 5,024,000 | Including VAT |
| Tax under the net tax rate method | CHF 108,000 | Sum of the relevant turnover multiplied by its approved rates |
Entry example: CHF 2,000,000 of VAT-inclusive sales at 6.2% gives CHF 124,000. The business is below the turnover ceiling but above the tax ceiling. Passing the first test alone is insufficient.
The rate depends on the actual industry and services, not on whichever rate you prefer. Describe the activity accurately. Some taxpayers are excluded even if both numerical limits are met. Consider the method when planning VAT registration.
Net tax rates are not the same as flat tax rates
The separate flat tax rate method, called taux forfaitaires or TaF in French, applies to specified categories such as public bodies, similar institutions and eligible associations or foundations. Its conditions and reporting frequency differ. Informal references to “flat-rate VAT” can obscure this distinction.
Calculate the tax on VAT-inclusive turnover
The basic formula is taxable turnover including VAT × approved net tax rate. Calculate separately for each applicable rate, add the results and account for any other required items or adjustments.
Assume the FTA authorises a 6.2% rate for the activity. The business sells CHF 100,000 excluding VAT of services taxed at the standard 8.1% rate.
| Step | Calculation | Amount |
|---|---|---|
| Net sales | Assumption | CHF 100,000 |
| VAT charged to customers | 100,000 × 8.1% | CHF 8,100 |
| VAT-inclusive turnover | 100,000 + 8,100 | CHF 108,100 |
| Net-rate tax | 108,100 × 6.2% | CHF 6,702.20 |
This simplified example assumes one rate and no acquisition tax or other adjustment. The customer invoice shows 8.1%, not 6.2%; the net-rate calculation uses CHF 108,100, not CHF 100,000. Follow the normal Swiss invoicing requirements.
The difference between output VAT and net-rate tax is not automatically extra profit. VAT on the business’s own purchases is not separately deducted under this method.
Industry rates and multiple activities
The published net-rate levels are 0.1%, 0.6%, 1.3%, 2.1%, 3.0%, 3.7%, 4.5%, 5.3%, 6.2% and 6.8%. They are not a menu of choices. Use the FTA’s classification and authorisation for the actual activities.
Since 2025, the general two-rate limit has been removed. An additional applicable rate is required where the relevant activity exceeds 10% of total taxable turnover under the prescribed rules.
Illustration: a sports shop
The following fictional figures use activity types illustrated by the FTA, assuming the corresponding rates are authorised.
| Activity | Turnover incl. VAT | Share | Net rate | Calculated tax |
|---|---|---|---|---|
| Sports goods sales | CHF 240,000 | 68.6% | 2.1% | CHF 5,040 |
| Relevant equipment rental | CHF 70,000 | 20.0% | 3.0% | CHF 2,100 |
| Ski and snowboard servicing | CHF 40,000 | 11.4% | 5.3% | CHF 2,120 |
| Total | CHF 350,000 | 100% | — | CHF 9,260 |
All three activities exceed 10% here. Do not apply these rates to every rental or repair business without checking the exact classification. Keep turnover separated in the accounts so the allocation can be substantiated.
Is it cheaper than the effective method?
Not necessarily. The effective method deducts eligible input VAT from VAT due on transactions. Net rates incorporate an assumed input-tax burden. The outcome depends on purchases, investment, overseas services and the mix of activities.
Using the same CHF 100,000 net sales and 6.2% approved rate, with no other adjustments:
| Assumption | Effective method | Net-rate method | Difference |
|---|---|---|---|
| CHF 1,000 deductible input VAT | 8,100 − 1,000 = CHF 7,100 | CHF 6,702.20 | Net-rate method lower by CHF 397.80 |
| CHF 4,000 deductible input VAT | 8,100 − 4,000 = CHF 4,100 | CHF 6,702.20 | Effective method lower by CHF 2,602.20 |
These are simulations, not a universal recommendation. They exclude administration costs, other transactions and switching adjustments. Compare several periods: major investment next year may reverse a conclusion based on low purchases this year. Check that assumed input tax is genuinely deductible.
What changed from 1 January 2025?
More rates and revised mixed-activity rules
The two-rate limit and the former 50% rule for certain mixed industries were removed. The activity split above 10% now matters. Do not simply retain old sales-account settings when activities change.
Adjustments when switching methods
Moving from the effective method to net tax rates requires repayment of previously deducted input tax on the relevant residual value of goods and services. The correction is made in the final return before the change, using the prescribed adjustment item.
Moving in the other direction can allow subsequent input-tax relief on qualifying residual values. Retain the acquisition history and calculations: VAT residual value is not necessarily the same as the book value.
Old special procedures removed
Former procedures associated with forms 1050, 1055 and 1056 were abolished. Do not reuse old export or other calculations without checking the current rules. This does not mean every export or acquisition now has identical treatment.
How to apply or change method
Apply through the FTA’s prescribed process, including the accounting options in its portal. Check the effective date and minimum duration before changing software settings.
Article 37 provides that net tax rates must be used for at least one tax period. After choosing the effective method, a business generally must use it for at least three years before moving to net rates. A change takes effect at the start of a tax period, subject to the detailed rules and any relevant exceptions.
Prepare recent accounts, forecasts, activity details, an asset inventory and the VAT history of significant investments. A method that appears attractive on sales alone may be costly once initial adjustments are included. If the business is closing, VAT deregistration may be the relevant process instead.
Returns, payments and the annual reporting option
Net-rate returns are normally half-yearly. This does not remove the need for current accounting and annual reconciliation. Acquisition tax on covered purchases must still be assessed and is not automatically offset by a separate deduction.
Since 11 May 2026, electronic filing uses the FTA’s VAT pro service. Arrange access and approval responsibilities with your adviser.
Annual VAT reporting is a separate option available on request to qualifying businesses since 2025. Its turnover ceiling is CHF 5,005,000, different from the CHF 5,024,000 net-rate eligibility ceiling. Timely past filing and payment also matter.
Annual filing does not mean holding all VAT until the next return. For authorised annual filers using net tax rates, an instalment is due on 30 August, followed by the annual return and balance under the applicable timetable.
Keep three decisions distinct: calculation method, invoiced-versus-received consideration basis, and reporting frequency.
Frequently asked questions
Does the net rate apply before or after VAT?
It applies to taxable turnover including VAT. In the example, 6.2% is applied to CHF 108,100 rather than CHF 100,000.
Which rate should customers see on invoices?
The statutory rate applicable to the supply, such as 8.1%, rather than the approved net tax rate used to calculate the payment to the FTA.
Can one company use three net tax rates?
Yes. Since 2025, the general limit of two has been removed. Follow the activity classification, 10% rule and FTA authorisation requirements, and keep the turnover categories separately identifiable.
Can I deduct VAT on a major investment separately?
Not under the ordinary net tax rate calculation: input tax is taken into account on a flat-rate basis. Include the investment in a comparison with the effective method and check any switching consequences.
Are net tax rates and flat tax rates the same method?
No. The French TDFN and TaF methods concern different eligible categories and have different conditions. Use the precise method name when applying or comparing rules.
Sources and further reading
About the author
Sarah Prieur
Sarah is a Swiss certified accountant, partner and head of operations at Karpeo. She supports SMEs and self-employed clients with accounting, tax, VAT and payroll, and oversees the quality of client files and year-end accounts. Before Karpeo, she spent eight years in audit at PwC Switzerland, progressing to manager.
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