Annual VAT reporting: how to apply, the deadline and whether it pays off

What annual reporting means

Value added tax (VAT) is owed for a set period. The law calls this period the tax period. The tax is levied by tax period. The tax period is the calendar year. On request, the ESTV permits the taxable person to use the business year as the tax period.[1] The ESTV is the Swiss Federal Tax Administration.

Within the tax period, you report in shorter intervals. As a rule, the tax is reported quarterly within the tax period.[1] For reporting using net tax rates (Art. 37 paras. 1 and 2), the tax is reported half-yearly.[1] With the net tax rate, you multiply your turnover by an approved flat rate instead of deducting input tax item by item. Input tax is the VAT you have paid yourself on purchases.

The partial revision of the Act added a new option. SMEs can now also choose to report VAT annually and make the reporting process more efficient.[6] The content of the return changes little. Annual reporting changes nothing about the declaration itself.[3] The page The VAT return explains how the normal return is structured.

Who can apply: turnover threshold and conditions

Annual reporting is available if your turnover from taxable supplies does not exceed CHF 5'005'000 per year.[1] Taxable supplies are sales and services on which VAT is charged.

If you have been liable for VAT for some time, two conditions apply. The ESTV authorises annual reporting if the taxable person: a. did not exceed the turnover threshold of Article 35 paragraph 1bis letter b of the VAT Act in the previous tax period; and b. has submitted all tax returns on time and has paid all tax claims in full and on time in the previous three tax periods or, if the liability has existed for a shorter period, since commencement of tax liability.[2]

If you have only just been entered in the VAT register, the ESTV looks ahead. It authorises annual reporting if the expected turnover with VAT in the first twelve months does not exceed the threshold set out in Article 35 paragraph 1bis letter b of the VAT Act.[2]

The commitment period also matters. Annual reporting must be used for at least one full tax period. And changes can only take effect at the beginning of a tax period.[1]

Applying in the ESTV portal: steps and the end-of-February deadline

You apply online. Annual reporting can be requested in the ESTV portal.[3] You can change your reporting arrangements directly online in our ESTV portal under “New business”, after selecting the relevant company.[4]

1. Check that your turnover from taxable supplies is below the threshold.
2. Check that you have submitted and paid everything on time in the last three tax periods.
3. Log in to the ESTV portal and select your company under “New business”.
4. Submit the application before the deadline expires.

The deadline works like this: taxable persons who wish to change to annual reporting must apply no later than 60 days after the start of the tax period from which the change is to take place.[2] For a tax period that is the calendar year, this is the end of February. If you want to report annually from the 2027 tax period, the deadline therefore expires at the end of February 2027.

Newly registered taxable persons have their own deadline. After receiving their VAT number, they have 60 days to apply for annual reporting via the ESTV portal.[3]

Paying instalments during the year

Reporting annually does not mean paying only once a year. With annual reporting (Art. 35a), the tax is collected on a provisional basis by paying in instalments that are determined and invoiced by the ESTV.[1] Provisional means that the instalments are advance payments which are credited later.

The tax claim in the last tax period is decisive in determining the instalments. If it is not yet known, it is estimated by the ESTV.[1] If the effective reporting method (Art. 36) or the flat tax rate method (Art. 37 para. 5) is used, one instalment amounts to one quarter of the tax claim. With reporting using the net tax rate method (Art. 37 paras. 1 to 4), one instalment amounts to half of the tax claim in accordance with paragraph 2. Under the effective method, you calculate the tax on your turnover and deduct the input tax.[1]

The dates are fixed. Under the effective and flat tax rate methods, three instalments are due. Under the net tax rate method, one instalment is due. For the effective and flat tax rate methods, the instalments fall due on 30 May, 30 August and 30 November. For the net tax rate method, the due date is 30 August. The instalments are available in the ePortal from April each year.[3]

There are minimum amounts. The minimum instalment is CHF 500 under the effective and flat tax rate methods and CHF 1'000 under the net tax rate method.[3] If the instalments do not fit, you can change them. The taxable person can adjust the amount of an instalment, upwards or downwards, in the ESTV portal up to ten days before it falls due.[3] In the end, the annual return is what counts. The instalments paid are credited against the tax claim according to the submitted annual return.[1] To keep track of your payments, a regular bank reconciliation helps.

Worked example: is the switch worthwhile for your SME?

The advantage lies in the effort. Instead of four returns under the effective method, you prepare one. Your payments are still spread over the year. However, part of the amount only falls due with the annual return.

The picture is different if you regularly receive money back, for example because you invest a lot. The law then provides a separate option: in the case of a regular input tax surplus, monthly reporting.[1] You only receive a credit after you have reported. The credit is paid out 60 days after the return reaches the ESTV.[5] If you report only once a year, there is accordingly only one such date. Whether the switch is worthwhile depends on your figures. If in doubt, clarify it with your fiduciary firm.

What happens if you miss the deadline

If you miss the application deadline, you have to wait. A change is only possible at the beginning of a tax period. For newly registered taxable persons, the rule is: after the deadline in paragraph 1 has expired, the taxable person may apply for annual reporting after one tax period at the earliest.[2]

If you miss a payment deadline, it costs you interest. In the case of provisional tax collection under annual reporting, interest is payable on the amount due without a reminder if the taxable person pays the instalments after the deadline or does not pay them in full.[1] Default interest is interest for the time you are late. Default interest and interest on refunds are, as a rule, only charged or paid from an amount of CHF 100.[5]

If you repeatedly breach your obligations, you can lose annual reporting. The ESTV revokes annual reporting at the beginning of the tax period after the next one if the taxable person does not submit the annual return on time, does not pay on time and in full, or reduces the instalments too much. The instalments are reduced too much if their total is less than 50% of the total tax claim under the effective and flat tax rate methods, or less than 35% under the net tax rate method.[3] Annual reporting also ends if your turnover is too high. The ESTV revokes annual reporting at the beginning of the next tax period if the taxable person exceeds the turnover threshold for three consecutive tax periods.[3]

If you need more time, you can ask for it. Even with annual reporting, you can submit corrected returns and annual reconciliations and request extensions of deadlines.[3]