Invoice management

Create customer invoices and check supplier invoices

Create customer invoices correctly

In order to correctly create customer invoices, particularly in international business, certain regulations in accordance with Art. 26 VAT Act must be observed.

Receipts for amounts of up to 400 francs do not have to contain any information about the beneficiary. Such receipts do not entitle you to a tax refund in the remuneration procedure.

In order to avoid reputational damage and corrective work, these requirements should be strictly met. If there is uncertainty about VAT reporting, a VAT expert should be consulted before the offer is prepared. These decisions are particularly important when it comes to cross-border services, as VAT rates abroad are often between 20 and 25 percent and, together with late interest and penalties, can quickly reach 50 percent of turnover. As a result, a supposedly profitable business can quickly lead to a significant loss. It is therefore advisable to consult local VAT expertise at an early stage.

Check supplier invoices and make any input tax allowances

Pursuant to Art. 26 MWSTG, the formally correctly invoiced input tax can be deducted when the input power is used in a business, taxable manner (see Art. 28 (1) of the VAT Act). It is recommended to carry out formal checks and return incorrect incoming invoices. Proof of payment of input tax is required for the deduction, but should only be required in exceptional cases (see Article 28 (3) of the VAT Act). This proof is provided when the input tax is shown in the payment document both in terms of amount and rate or is referred to the correctly issued invoice (see Art. 26 MWSTG).

According to Art. 3 bst. k of the VAT Act, an invoice is any document which is identified as such between the parties (e.g. commercial invoice, order, receipt or contract) with which a third party (e.g. customer) is billed for a service.

Companies with sales exempted from VAT generally have to make an input tax correction. However, the FTA waives this correction for minor ancillary income, such as interest or securities income, which amounts to a maximum of 5 percent of total income or 10,000 CHF per tax period.

When subsidies are received, input tax must be reduced, either in proportion to total income (including donations) for general operating subsidies (see Art. 75 (3) VAT Act) or in relation to expenses in a sector of activity if the subsidy is granted exclusively for that sector (see Art. 75 (2) VAT Act, so-called object-related subsidies). If there is no input tax in this area or there is no right to deduct input tax (e.g. due to excluded transactions, see Art. 29 (1) of the VAT Act), the input tax reduction does not apply.

Input tax adjustments are often complex and subject to the FTA's discretion. It is therefore advisable to submit a written request with the relevant information when input tax amounts are high or a VAT concept is defined.

Compliance with deadlines

VAT must be declared and paid no later than 60 days after the end of the quarter or semester. Failure to meet this deadline will result in a default interest of 4 percent. It is advisable to meet the deadlines, as deadline extensions of up to 60 days can be requested online. However, frequent reminders or time extensions could result in VAT control.

conclusion

Regular turnover reconciliation across all income statement accounts, fixed assets and advance payments helps to significantly reduce the deferred VAT risk. This is particularly effective when accounting is evaluated per account and VAT number in order to prove the balances and document the transition to the VAT declaration. It is important to use a VAT code for every transaction. This method saves time and ensures that there are hardly any abnormalities at the FTA, especially when deadlines are met and input taxes are regularly adjusted. In the case of cross-border transactions, an expert should also be consulted to clarify the VAT effects in the respective foreign country, except for clear exports of goods.

Your MKY Treuhandpartner GmbH

Source: Value Added Tax Act | VAT regulation

Disclaimer: The content of this blog post is for informational purposes only and does not constitute professional advice.
Each individual case should be reviewed individually and we recommend that you seek professional advice for specific questions.