VAT on services obtained abroad-Reverse charge- CH

Services received from abroad must be declared in the Swiss VAT Report.

Unlike imported goods, which go through customs clearance, services purchased from abroad do not have a customs clearance document. VAT must therefore be calculated and recorded directly in the accounting.

This procedure is called Reverse Charge and involves two operations:

• Self-assessment: the VAT due on the service purchased from abroad is calculated and recorded.
• VAT recovery: the same amount is recorded as recoverable VAT, if you are entitled to deduct it.

With Banana Accounting, Reverse Charge can be recorded easily by entering two VAT codes in the same cell: one for self-assessment and one for VAT recovery.

VAT codes to use

In our templates for Switzerland, the VAT Codes table already includes the following codes for services received from abroad:

• B81-1: calculates the VAT due (self-assessment).
• I81-1: calculates the recoverable VAT.

Both codes have Amount Type 1, so VAT is calculated on the net amount, excluding VAT.

Important: for code B81-1, in the Complete view, the value "Yes" must be entered in the Don't Warn column. Otherwise, the program displays an error message.

How to record Reverse Charge

To record a service received from abroad:

1. Enter the date, description and accounts for the transaction.
2. In the Amount column, enter the amount of the service purchased.
3. In the VAT Code column, enter both codes B81-1 (self-assessment) and I81-1 (VAT recovery).

The program automatically calculates the VAT due and the recoverable VAT, recording both amounts in account 2201 VAT Report.

If the VAT is fully recoverable, the two amounts offset each other and there is no net VAT amount to pay. However, both amounts are still included in the VAT Report.

 

VAT on services in foreign currency

When a service purchased from abroad is recorded in a foreign currency account, Reverse Charge must be recorded using two separate transactions.

1. Recording the purchase

Record the purchase of the service in the foreign currency, without entering any VAT code.

2. Recording the Reverse Charge

On the following row:

• In the Currency column, specify the base currency and enter the amount in foreign currency.
• In the Debit and Credit columns, enter the same clearing account (for example, 1090).
• In the VAT Code column, enter both codes B81-1 and I81-1.

The program calculates and records the VAT due and the recoverable VAT in the base currency.

After recording the transactions, the balance of the clearing account must be zero.

VAT on services from abroad and the Net Tax Rate VAT Form

If you use the net tax rate method, you must record the purchase and apply only VAT code B81-1 for self-assessment.

VAT recovery is not recorded, as this method does not allow VAT deductions on purchases, including those made abroad.