Since January 1, 2025, it has been possible to settle VAT annually under certain conditions. This option is available for companies with an annual turnover of up to CHF 5,005,000, provided the application has been approved by the Federal Tax Administration (FTA). In practice, this means that payments on account are made for the first three quarters (or the first semester) and a statement only has to be prepared and submitted for the fourth quarter.
In principle, it can be said that annual accounting is particularly worthwhile for SMEs that have manageable accounting costs due to their size, keep their records very tidy and have always declared and paid VAT on time in the past. A good example is companies that outsource their accounting completely to a trustee.
It must be examined very carefully in each individual case to determine whether the advantages outweigh the disadvantages. Therefore, no general recommendation can be made to switch to annual billing if the criteria are met at all.
| + Advantages | – Disadvantages |
| More efficient administrative work and less “accounting stress”: You have to do the accounting regularly, but no longer under pressure, before the deadlines expire, which enables better planning and distribution over the year The effective declaration of VAT for the first three quarters is no longer necessary | High level of personal responsibility for the entrepreneur: It is essential to keep an eye on sales and adjust payments on account if necessary Depending on the accounting system used, manual verification and reconciliation may be necessary |
| Better liquidity planning at Year: Thanks to the invoices on account, it is already clear at the beginning of the year when and in what amount payments are to be made | Massive liquidity burden with the final payment: Careless planning and payments on account that are too low risk a high final payment and possibly interest on arrears |
| Flexibility: The prepayment installments can be adjusted in the ePortal (up to 10 days before the due date) | Decision with consequences: Commitment to the annual statement for at least three tax periods. The FTA can revoke the annual statement if, among other things, debt collection proceedings had to be initiated due to missing payments or the payments on account were reduced too much |
Field report:
“I have been using the FTA’s ePortal for my clients’ VAT returns for years. It is practical and offers great benefits for us trustees. You can be notified when deadlines expire. The complete accounting history for each client is available. Corrections and annual reconciliations can be created and transmitted quickly and easily. After careful examination and consideration, I suggested the changeover to a few clients for whom the advantages absolutely outweighed the disadvantages. These are clients who meet all the criteria, who will never exceed the turnover limit in the long term, who have always declared and paid VAT on time, who are very disciplined and provide their documents regularly, who have constant turnover or who were able to estimate their turnover for the whole year at the beginning of the year based on their planning.
Until the end of February 2025, I was able to apply for the annual statement online via ePortal with just a few clicks. The ePortal immediately generates proposals for the three payments on account based on the previous year’s statements. These can be easily adjusted. The prepayment invoices including QR payment slip are immediately available as a PDF and can be downloaded. Towards the end of the due date for the payment on account for the first quarter of 2025, I received an email notification that the payments were due soon. I found this very practical and helpful. But I also see the risk of carelessly and negligently taking advantage of this flexibility. I’m always open and curious about innovations that are supposed to simplify things, but the devil is in the detail and often there is no significant benefit.”
The switch to annual billing requires discipline and foresight on the part of the entrepreneur and swift cooperation with the trustee. This choice entails various risks and has long-term consequences. In addition, due to the online obligation (also an innovation since January 1, 2025), all declarations must be made electronically via the FTA’s ePortal, which requires a login. Only with this login is it possible, for example, to apply for an annual statement, make adjustments to the basis for payment on account or submit the VAT return. Without advice and support from a trustee, the changeover to annual accounting involves a very high risk for the entrepreneur. If turnover fluctuates greatly or it is not foreseeable whether the limit of CHF 5,005,000 will be exceeded in the foreseeable future (and in the long term), the changeover makes no sense. The flexibility to adjust installments requires a great deal of personal responsibility and forward-looking liquidity planning. Furthermore, many financial accounting systems offer liquidity planning options. There are various providers that work with AI and offer significant time savings when entering data. In addition, these systems, provided they are well configured and used by qualified users, deliver all possible evaluations at the touch of a button, even the finished VAT statement.
Conclusion:
It is good to know that this innovation exists, but it should be treated with great caution and is only recommended to a very limited extent. Only a qualified specialist is in a position to weigh up the opportunities and risks before making recommendations. Without advice or support from a trustee, for example, the risk of making misjudgements in this context is immense.
This article is for information purposes only and does not replace individual advice.
