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This document explains how to reconcile the annual turnover with the Swiss VAT Returns in order to identify and correct any discrepancies before or during an audit.
It is intended for fiduciaries, accountants, and Banana Accounting users who need to prepare or review a VAT reconciliation for Switzerland.
What is VAT Reconciliation and why is it important?
Reconciling turnover with the VAT Returns is the process of verifying that the figures reported to the Swiss Federal Tax Administration (FTA) match the transactions recorded in the accounting file. It is an essential check to ensure tax compliance and to prevent issues during an audit.
In Banana Accounting, turnover represents the total sales amounts recorded in income accounts, excluding VAT. VAT is automatically deducted by the program whenever a VAT code is assigned to a transaction.
Comparing the accounting records with the periodic VAT Returns may reveal differences that are not always easy to identify. For example, some accounting transactions are included in the turnover but excluded from the VAT calculation, making manual verification time-consuming and complex.
The Swiss Annual VAT Reconciliation extension
To simplify and speed up this process, Banana Accounting provides the Swiss Annual VAT Reconciliation extension.
The extension automatically compares the amounts declared in the VAT Returns with those recorded in the accounting file, immediately highlights any differences, and identifies the transactions that generated them—without the need for manual investigation.
To use this extension:
- The Advanced plan of Banana Accounting Plus is required. In the future, a special subscription or an additional fee may be required.
- The accounting file must use double-entry bookkeeping.
Key benefits
Performing VAT reconciliation accurately and regularly is essential for any business subject to Swiss VAT. It keeps the accounting records aligned with tax declarations, reduces the risk of penalties during an audit, and provides a reliable overview of the company's financial position. However, carrying out this process manually requires time, attention, and a thorough understanding of the accounting transactions.
The Swiss Annual VAT Reconciliation extension automates this process, turning a time-consuming review into a fast and reliable operation:
- Immediate detection of discrepancies.
- Accurate identification of the transactions causing the differences.
- Better control throughout the year.
- Allows problems to be resolved before they accumulate.
- More accurate VAT Returns before submission to the Swiss Federal Tax Administration (FTA).
- Prevention of errors and omissions.
- Simplified accounting audits.
- Easier preparation of documentation for tax inspections and audits.
- Improved and well-documented internal controls.
Main causes of turnover differences
In Banana Accounting Plus, all transactions associated with a VAT code contribute to the VAT calculation and the amounts reported in the VAT Return. Differences between the turnover recorded in the accounting file and the VAT Return are generally caused by the following:
- Transaction without a VAT code
A VAT-taxable sale recorded without the corresponding VAT code is included in the accounting turnover but excluded from the VAT Return. For example, a sale of CHF 1,000 recorded without a VAT code increases the turnover by CHF 1,000, but it does not appear in the turnover declared in the VAT Return for that period. - Transactions added after submitting the VAT Return
New transactions with a VAT code were entered after the data had been submitted to the Swiss Federal Tax Administration (FTA). - Transactions deleted after submission
Transactions with a VAT code were deleted after the data had been submitted to the Swiss Federal Tax Administration (FTA). - Incorrect date
Transactions with a VAT code were recorded with the wrong date and were therefore included, for example, in a previous period that had already been reported. - Reversal transactions with an incorrect VAT code
Reversal transactions were recorded using incorrect VAT codes.
For example, if a reversal of an export sale is recorded using VAT code VE-0, a discrepancy is created. The reversal reduces the turnover (because it is posted as a debit), but VAT code VE-0 causes the program to add the amount to the turnover instead of subtracting it. - VAT codes on adjustment or closing entries
Adjustment and closing entries should normally not include a VAT code when using cash-based accounting.
Summary
With the Swiss Annual VAT Reconciliation extension, this verification process is optimized in two key areas:
- Faster and simpler workflow.
- Higher quality verification.
Integrating VAT Reconciliation into your accounting routine allows you to work with greater confidence while reducing the risk of errors that may lead to additional costs, complications, and significant time loss.