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Avoid default interest on VAT

Interim dividends are possible as of 1 January 2023

Within 60 days after the end of the accounting period, the value-added tax must be settled and any tax due must be paid. In case of late payment, default interest is owed, which arises not only on domestic and purchase tax, but also on import tax matters. The default tax is due without a reminder from the tax office and the reasons for non-payment of the amount are irrelevant.

There is an exception, which can only be asserted in very rare exceptional cases: ” No interest on arrears is due in case of an additional charge if this is based on an error that would not have led to a tax loss if the federal government had handled it correctly.” The meaning of this provision is open to interpretation and its scope of application is relatively narrow, i.e. it is almost not worth trying to apply it.

The default interest is 4% and can be expensive, e.g. in case of retroactive registration in the VAT register or in case of tax offsets within the framework of a VAT control, which usually covers several tax periods.

The obligation to pay interest on arrears ends with the payment of a VAT claim, so it makes sense to stop the obligation by paying the expected tax liability. Likewise, in the context of appeal proceedings with an uncertain outcome, it should be considered whether the disputed tax liability should be paid with the appropriate reservation in order to interrupt the interest on arrears. Interest amounts of less than CHF 100 are not charged.