Transactions with VAT breakdown

This system is used when you want to have the immediate breakdown of VAT for each transaction in the Transactions table .

It is important to know:

• If this method is used, attention must be paid to the fact that the final VAT is calculated on the invoice amount already including VAT, therefore on the total turnover.
• The VAT deduction that is made in the account will not be the same as the VAT amount invoiced to the customer. These situations can be confusing, so we recommend using this method only if you have a good understanding of VAT mechanisms.

How to proceed

Before proceeding with the processing of the VAT statement (facsimile and XML file) it is necessary to:

• Check if the VAT Codes table is updated.
• In the VAT Codes table, enter your tax rates relating to codes F1, F2, FS1, FS2 (sample rates have been entered in the following window).
• In the Transactions table, enter the transactions, indicating the code for the balance rate. The VAT balance percentage and the amount separated from the revenue account will appear.

VAT facsimile and XML file for the FTA

At the end of the period, to process the VAT facsimile statement and the XML file to be forwarded to the FTA, use the  Swiss VAT: net tax rate method extension.

Extensions are installed via the Extensions menu > Manage Extensions command.

VAT codes for the net rate (figures 322, 332 up to 2023, 323, 333 from 2024)

From 01.01.2024, the VAT codes for the flat tax rate are indicated with F1, F2 and FS1, FS2 those relating to discounts.
For 2023, the existing ones (F3, F4 e FS3, FS4)  will remain valid. These codes can also be renamed.

Important: by default the value "YES" must appear in the "% VAT on Gross" column, as shown in the following screen:

See the information below for more details.

Registration with VAT breakdown

Figures 322, 332 up to 2023, 323, 333 from 2024

When registering, the program breaks down the related VAT amount for each individual transaction and it registers it to the VAT account statement.

VAT payment at the end of the period

At the end of the period, after calculating the VAT to be paid, a transaction must be made to transfer the balance from the VAT account to the VAT account to be paid.
The VAT return account, after this transaction, will have zero as a balance.

When the VAT is paid, the payable VAT account will be registered onto the debit account and a liquidity account will be registered in the credit account.

Comparison between the turnover in the accounting records and the turnover declared in the VAT return

When using the Flat VAT Rate method with VAT excluded from the transaction amount, it is normal for the turnover shown in the accounting records to differ from the turnover reported in the VAT return.

Why does this difference occur?

With the VAT exclusion method, each sales transaction is recorded using a VAT code that automatically separates the VAT amount from the amount posted to the revenue accounts.

As a result:

• only the net amount, excluding VAT, is recorded in the revenue account;
  the VAT amount is recorded separately in the VAT account.

For this reason, the turnover shown in the Profit & Loss Statement and in the accounting records is lower than the turnover reported in the VAT return.

Why does the VAT return show a higher amount?

Under the Flat VAT Rate method, VAT is calculated on the gross turnover, that is, including the VAT charged to the customer.

Therefore, the program correctly reports the gross amounts in the VAT return, as required by the Swiss Federal Tax Administration.

The difference between the turnover in the accounting records and the turnover reported in the VAT return therefore corresponds to the VAT that has been automatically excluded from the revenue.

How can you verify that the turnover is correct?

To verify that the turnover declared in box 200 of the VAT return is correct, simply add the VAT amount excluded from the revenue to the turnover shown in the accounting records.

This gives you the gross turnover reported in the VAT return.

The recommended method

To simplify the reconciliation between the accounting records and the VAT return, we generally recommend using the Flat VAT Rate method without excluding VAT from the transaction amount.

In this case:

• the gross amount always remains recorded in the sales transactions;
• Flat VAT Rates are not entered in the VAT Codes table;
• when preparing the VAT return, the rates are entered directly in the extension dialog.

At the end of the period, you will then need to make an adjusting transaction to transfer the VAT portion from the revenue account to the VAT account.