Annual VAT reconciliation

An essential and compulsory step

Annual reconciliation is a legal obligation (article 72 of the VAT Act and article 128 of the VAT Ordinance) for all companies subject to VAT in Switzerland. It ensures that tax returns are accurate and correct by reconciling/comparing the amounts of turnover and input tax (recovered VAT) declared in its VAT statements with its annual accounts and financial statements on an annual basis. The purpose of the VAT reconciliation work is to verify and justify the tax treatment applied throughout the year.

Why is this essential?

1. Legal compliance :

• • Ensuring compliance with the Federal Tax Administration (AFC-TVA).
  • Avoid fines for uncorrected discrepancies.

2. Limiting risks by identifying discrepancies :

• • Identify and declare discrepancies with a specific rectifying statement.
  • Limit interest on arrears and costly errors by rectifying the situation with the FTA - VAT as quickly as possible.

3. Guarantee your image with the AFC-TVA:

• • Reconciliations are systematically requested during VAT audits.
  • Meticulous and comprehensible preparation of annual VAT reconciliations is an indicator of the rigour with which your company manages its tax obligations, and thus limits the risk of queries or disputes.

4. Optimise the VAT management of your transactions:

• • Use reconciliation as an instructive learning tool for financial managers (in-depth understanding of operations).
  • Provide management with a better ability to manage financial and tax risks.
  • Enable the necessary measures to be taken in the event of discrepancies, incorrect accounting entries, inaccurate VAT processing, etc.

Practical advice for reconciliation

• Careful planning: Start reconciliation work as early as possible to ensure that all information is complete, documented and ready for review, as soon as your financial year ends and no later than 30 August of the following year.

• Complete documentation: Maintain understandable and accessible files to facilitate any verification by the FTA-VAT.

• Updating: Incorporate new VAT developments into your processes and adjust your treatments if necessary.

• Correcting and reporting discrepancies: Use the «Annual Reconciliation» form (available online) for all discrepancies identified within the 240-day deadline, i.e. by 30 August. Interest on arrears of 4% applies to any difference calculated from the due date of the tax period concerned.

Conclusion

Annual reconciliation is not only a legal obligation, but also an opportunity to ensure that your company's declarations are correct and controlled, thereby minimising any negative financial consequences. In this way, careful reconciliation turns a legal obligation into a benefit for your business.

Our VAT team is here to support you

We offer expert assistance to guarantee the accuracy of your declarations. 

Our team can help you :

• Prepare accurate and documented reconciliations
• Identify any discrepancies
• Reassessing the VAT treatments applied
• Prepare the necessary corrective statements 

We also offer training to ensure that your staff are well informed about best practice. With our support, you can approach VAT reconciliation with confidence, minimising risk and optimising your processes.