VAT Net Rate: Which Rate Applies to Your Industry?

Anyone in Switzerland subject to VAT must choose an accounting method: the actual method or the net rate method (NRM). Many entrepreneurs know that the net rate exists — but hardly anyone knows the exact rate for their own industry or understands how significant the difference is in everyday practice. This article shows, using real industry examples, which rate applies to whom and when the method is worthwhile.

What is the VAT net rate anyway?

With the net rate method, you pay the Swiss Federal Tax Administration (FTA) a flat percentage of your gross turnover — instead of laboriously calculating and deducting input tax. The idea: the net rate accounts for how much input tax a sector typically has. The higher the material costs in an industry, the lower the net rate.

Two fundamental rules always apply:

• The net rate lies between 0.1 % and 6.5 % of taxable gross turnover.
• Per company, a maximum of two different net rates are permitted simultaneously.

The FTA publishes the complete overview of current rates following VAT adjustments in its sector guides. An overview of the applicable standard rates, reduced rates and special regulations can be found in the foundational article on Swiss VAT basics 2026 — rates, duties and special rules.

VAT net rates by industry: concrete examples

The following table shows net rates for selected activities (as of 2024/2026, based on FTA sector guides):

Industry / Activity	Net Rate
Business consulting, IT services	5.9 %
Architecture, engineering	5.9 %
Audit, bookkeeping	5.9 %
Hairdressing, cosmetics	2.9 %
Gastronomy (restaurant, café)	5.1 %
Retail (food)	0.6 %
Retail (non-food)	2.1 %
Painting trade	3.7 %
Electrical installations	2.0 %
Software development (own products)	5.9 %
Doctors, therapists (VAT-liable services)	2.0 %

Important: This table is for orientation only. The current FTA sector guide for your specific activity is always binding.

Calculation example: Consultant vs. Electrician

Let's consider two fictional but realistic examples:

Example 1: IT Consultant, annual gross turnover CHF 150,000

• Net rate: 5.9 %
• VAT owed: CHF 150,000 × 5.9 % = CHF 8,850
• Comparison: Standard rate on net invoice would be CHF 150,000 / 1.081 × 8.1 % = CHF 11,240 less input tax
• Input tax is minimal for a pure service provider (laptop, software) → the NRM settlement can be several hundred CHF cheaper.

Example 2: Electrical Installer, annual gross turnover CHF 300,000

• Net rate: 2.0 %
• VAT owed: CHF 300,000 × 2.0 % = CHF 6,000
• Actual method: The business purchases significant materials (cables, switchboards, lighting) — input tax is high. Depending on material usage, the actual method may still be cheaper.
• Conclusion: For material-intensive trades, comparing methods is worthwhile — the low net rate does not always offset lost input tax.

Two rates simultaneously: When is this relevant?

A company offering both consulting services and software subscriptions can settle both activities with the same net rate of 5.9 % — no problem. It becomes more complex when very different activities combine, such as a hair salon that also sells retail products.

In this case, the FTA assigns a separate rate to each activity. Both turnover amounts must be shown separately on the invoice, and settlement occurs using two net rates. Once a third activity is added, the net rate method is no longer permitted — only the actual method remains.

Those wishing to change their settlement frequency or method will find guidance in the article on switching VAT methods in Switzerland.

Settlement in practice

With the net rate method, you settle with the FTA only twice per year (half-yearly periods). This significantly reduces administrative burden — a real advantage for freelancers and small businesses without a dedicated accounting department.

On your outgoing invoices, you still show VAT normally: at the statutory tax rate (8.1 %, 2.6 % or 3.8 %). The net rate determines only what you pay the FTA — not what you charge the customer. Anyone wishing to create a correct Swiss QR-bill with VAT disclosure enters the full statutory VAT rate, not the net rate.

Important: The invoice itself contains no reference to the net rate method. For the recipient, the invoice looks like any other VAT invoice.

Common pitfalls

Using the wrong sector rate: Relying on an outdated rate or misinterpreting the FTA's sector classification risks back payments. Always check the current FTA sector guide.

Not separating mixed turnover: VAT-exempt turnover (e.g., rental, certain educational services) must not be included in the net rate calculation basis.

Forgetting the turnover threshold: The net rate method is only permitted if annual turnover does not exceed CHF 5,005,000 and the VAT liability does not exceed CHF 103,000. Once you grow beyond this, you must switch to the actual method.

Not considering investment deductions: With large investments (machinery, vehicles, renovations), the actual method allows full input tax deduction. The NRM method provides nothing for this — this can be expensive in investment years.

At a glance

• The net rate varies by industry between 0.1 % and 6.5 % of gross turnover.
• Service companies (consulting, IT, audit) typically have high rates around 5.9 %, while material-intensive businesses have significantly lower ones.
• Your outgoing invoice always shows the statutory VAT rate — not the net rate.
• The NRM method allows only two different rates per company.
• In investment years or for very material-intensive activities, the actual method may be cheaper — a comparison is worthwhile.
• The current FTA sector guides are always authoritative.

When creating invoices on SnapBill, you always enter the statutory VAT rate on the invoice — your internal settlement with the FTA remains unaffected.