The 2025 Partial Revision of the Value Added Tax Act (MWSTG): Key Changes, Implications, and Compliance for Businesses

Switzerland’s taxation landscape is evolving, with the 2025 Partial Revision of the Value Added Tax Act (MWSTG) bringing significant updates to Swiss VAT rules. This reform, driven by the Federal Tax Administration (FTA), aims to modernize VAT collection, tighten fraud prevention measures, and ensure that e-commerce platforms and mail-order companies VAT obligations align with contemporary trade practices.

The revised law introduces new VAT liability thresholds, updates on VAT reporting, and an enhanced focus on electronic platforms taxation. In this article, we explore the key changes, their impact on SMEs VAT settlement, and the necessary steps for compliance.

Key Highlights of the 2025 VAT Act Revision

• Lower VAT registration threshold for businesses operating in Switzerland.
• Mandatory VAT collection for e-commerce platforms facilitating sales to Swiss consumers.
• Introduction of new regulations on small consignments VAT.
• Tighter fraud prevention measures to ensure tax compliance.
• The expansion of input tax deductions and refinements to the balance tax rate method (SSS method).
• Stricter obligations for investment foundations VAT compliance.

New VAT Liability and Registration Thresholds

One of the most crucial elements of the 2025 Partial Revision of the Value Added Tax Act is the revision of the VAT registration threshold. Under the updated framework:

• Domestic and foreign businesses generating CHF 100,000 or more in taxable revenue in Switzerland must register for Swiss VAT.
• E-commerce and mail-order companies VAT obligations are now extended, requiring foreign sellers exceeding CHF 100,000 in annual sales to Swiss customers to register for VAT.
• Small businesses and startups benefit from some VAT exemptions, but must monitor their revenue to ensure compliance with new thresholds.

These changes emphasize fair competition by ensuring that foreign online sellers are taxed similarly to Swiss businesses.

Fraud Prevention Measures and Strengthened Compliance

To combat VAT fraud, the Swiss government is introducing enhanced compliance requirements:

• Stricter reporting rules for businesses using the balance tax rate method (SSS method).
• Investment foundations VAT compliance updates to prevent tax avoidance schemes.
• Cross-border fraud detection improvements, ensuring VAT reporting accuracy.
• Strengthened enforcement by the Federal Tax Administration (FTA), with higher penalties for non-compliance.

These new regulations aim to increase tax transparency and prevent revenue losses linked to VAT evasion.

VAT Reporting and Input Tax Deductions for SMEs

For SMEs VAT settlement, the revision introduces simplifications in VAT reporting and tax deductions:

• Extended input tax deductions allow businesses to claim back more eligible expenses.
• The balance tax rate method (SSS method) receives adjustments to simplify VAT calculations for eligible businesses.
• Quarterly VAT filing options streamline administrative processes, reducing bureaucratic burdens.

These modifications enhance tax efficiency, making compliance easier for small and medium-sized enterprises.

How Businesses Should Prepare

To ensure seamless compliance with the 2025 Partial Revision of the Value Added Tax Act, businesses should:

1. Review VAT registration requirements and assess their VAT liability.
2. Implement robust VAT compliance strategies, especially for e-commerce and electronic platforms taxation.
3. Monitor small consignments VAT changes and adjust pricing structures accordingly.
4. Ensure proper input tax deductions to maximize savings and prevent compliance risks.
5. Work closely with the Federal Tax Administration (FTA) for guidance on VAT reporting obligations.

VAT Reporting and Input Tax Deductions for SMEs

For SMEs VAT settlement, the revision introduces simplifications in VAT reporting and tax deductions:

• Extended input tax deductions allow businesses to claim back more eligible expenses.
• The balance tax rate method (SSS method) receives adjustments to simplify VAT calculations for eligible businesses.
• Quarterly VAT filing options streamline administrative processes, reducing bureaucratic burdens.

These modifications enhance tax efficiency, making compliance easier for small and medium-sized enterprises.