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Old 29.05.2020, 14:21
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MWST under 100,000 revenue

Sorry for not paying attention in class...
and pardon me for not being able to find an answer yet.

I understand that under 100,000 yearly revenue I do not have to apply MWST for my business. But is there actually a reason why I should apply, are there any benefits?
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Old 29.05.2020, 14:47
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Re: MWST under 100,000 revenue

You deduct the MWST from any purchase your business makes from the MWST you charge and handover to the tax authorities.

I can make you look more "professional".

If you don't make many purchases, you can register to pay Pauschal - this means you pay slightly less over.

The disadvantage is that if you're selling a widget to the public for 10CHF, your competitor who isn't MWST registered can sell it for 9.29 for the same profit margin.
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Old 29.05.2020, 15:11
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Re: MWST under 100,000 revenue

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You deduct the MWST from any purchase your business makes from the MWST you charge and handover to the tax authorities.

I can make you look more "professional".

If you don't make many purchases, you can register to pay Pauschal - this means you pay slightly less over.

The disadvantage is that if you're selling a widget to the public for 10CHF, your competitor who isn't MWST registered can sell it for 9.29 for the same profit margin.
hmm you're right about the "professional" part. It's like telling people I make less than 100k revenue
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Old 29.05.2020, 15:46
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Re: MWST under 100,000 revenue

There are so many sole-traders not charging sales tax that not looking professional is unlikely to be a problem.
If you start charging GST it is going to add considerably to your paperwork and means that you are going to have to have proper accounts which a sole trader is spared to some extent.
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Old 29.05.2020, 16:14
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Re: MWST under 100,000 revenue

I haven't looked at it in detail but I expect:
(i) that the paperwork can be burdensome (as already mentioned);
(ii) if you charge VAT, you can also recoup VAT that you have paid on services/goods you have purchased. Accordingly, the actual "cost" or price increase of charging VAT depends heavily on how much services/goods you purchase in order to provide your own services.
(iii) similarly how any "cost" or price increase of charging VAT affects your own customers is dependent on whether they are end consumers or they themselves charge VAT (because in the latter case they can again recoup such costs).

This website lists when a voluntary VAT registration could make sense:
https://www.kmu.admin.ch/kmu/en/home...taxes/vat.html

However, you would probably need to do a specific analysis whether it actually make sense. Let me know if you need the contact details of a VAT specialist.
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Old 29.05.2020, 16:30
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Re: MWST under 100,000 revenue

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I haven't looked at it in detail but I expect:
(i) that the paperwork can be burdensome (as already mentioned);
(ii) if you charge VAT, you can also recoup VAT that you have paid on services/goods you have purchased. Accordingly, the actual "cost" or price increase of charging VAT depends heavily on how much services/goods you purchase in order to provide your own services.
(iii) similarly how any "cost" or price increase of charging VAT affects your own customers is dependent on whether they are end consumers or they themselves charge VAT (because in the latter case they can again recoup such costs).

This website lists when a voluntary VAT registration could make sense:
https://www.kmu.admin.ch/kmu/en/home...taxes/vat.html

However, you would probably need to do a specific analysis whether it actually make sense. Let me know if you need the contact details of a VAT specialist.
Thanks a lot!
point (iii)... If I understood correctly once I'm registered to VAT I need to include that to all my invoices. I have both kinds of clients (end consumer and companies who themselves charges VAT). So I guess that will make my pricing less competitive with the former...

I guess I will deal with this when my business gets bigger...
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Old 29.05.2020, 17:09
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Re: MWST under 100,000 revenue

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If you start charging GST it is going to add considerably to your paperwork and means that you are going to have to have proper accounts which a sole trader is spared to some extent.
I've been doing VAT/MWST for over 20 years in various countries. It's about half an hour's work per 6 months, if that. As a sole trader you'll be keeping track of invoices anyway. It's hardly onerous. If you take the Pauschal route, it's even simpler - and it's free money! (About 40CHF per 1000CHF, assuming you have no purchases to offset).
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