Swiss Cash Basis Accounting Guide
Cash-basis in Switzerland (Einnahmen-Ausgaben-Rechnung, EAR)
This guide explains who in Switzerland may or must use the Einnahmen-Ausgaben-Rechnung (EAR), how it works in practice, and how its figures flow into your Swiss tax return. You’ll also find a concise comparison with full double-entry accounting under the Swiss Code of Obligations (CO) plus practical VAT notes.
Use the table of contents below to jump straight to what you need.
Who may (or must) use the EAR?
Under the Swiss Code of Obligations (CO), small sole proprietorships and partnerships under certain size criteria may keep an income–expense record plus a statement of assets and liabilities instead of full double-entry accounts. This is often called the Milchbüchleinrechnung.
CO thresholds & accounting duties
If prior-year sales are ≥ CHF 500,000 (sole proprietorships/partnerships) or you operate as a legal entity (e.g., AG/GmbH), you must keep proper double-entry books and prepare financial statements (balance sheet, income statement, notes) under Art. 957 ff. CO. Below CHF 500,000, an income–expense account and statement of assets are sufficient.
Who may continue using the EAR
Sole proprietors and partnerships with sales < CHF 500,000 can use the EAR. If your business exceeds that threshold, switch to full double-entry bookkeeping in the following financial year.
How the EAR works (mechanics)
The EAR determines profit using a simple cash-basis view of the year’s receipts and payments, plus a year-end statement of assets and liabilities.
Cash basis (receipts & payments)
Record business income when received and expenses when paid. Unlike accrual accounting, receivables, payables and accruals are generally not recognized in the income–expense statement. The year-end asset statement lists key positions (e.g., bank, equipment, loans).
Assets & depreciation
Business assets used over multiple years are typically depreciated for tax purposes using Swiss tax depreciation practice (industry standard rates). Low-value items are often expensed immediately (materiality). Align rates with your canton/advisor.
Swiss VAT (MWST) treatment
- Rates (from 1 Jan 2024): Standard 8.1%, reduced 2.6%, special accommodation 3.8%.
- Registration: Generally required at CHF 100,000 annual turnover (resident) and for foreign businesses with Swiss-taxable supplies (worldwide turnover considered).
- Methods: Effective method (input tax deduction) vs. net tax rate / Saldosteuersatz (flat % of turnover). Filing can be based on agreed consideration (accrual) or received consideration (cash).
- Filing cadence: Returns typically due within 60 days after the end of the reporting period.
Records & documentation
Maintain a chronological list of receipts and payments with supporting evidence, plus a simple asset/debt overview. Retention and auditability follow CO rules.
Integrating the EAR into your Swiss tax return
EAR results flow into your personal tax return (cantonal/communal and direct federal tax) if you operate as a sole proprietor or partnership.
Cantonal filing & what to attach
With e-filing portals (e.g., eTax), attach your income–expense statement and the statement of assets & liabilities. Some cantons provide templates—follow your canton’s checklist.
Where the result goes in the return
Your net business result (profit or loss) is reported as self-employed income. Business assets/debts feed into wealth tax schedules at the cantonal level.
Social insurance (AHV/IV/EO)
Self-employed persons register with the compensation office (SVA) and pay AHV/IV/EO contributions based on profit. Small activities under CHF 2,300 per year may be exempt (opt-in possible).
EAR vs. Double-entry accounting (CO)
| Topic | EAR (income–expense) | Double-entry (CO) |
|---|---|---|
| Method | Cash-basis; year-end asset/debt statement. | Accrual; receivables, payables, inventories; full statements. |
| Complexity | Lightweight; fewer formalities. | Formal system per Art. 957 ff. CO with notes and (if applicable) audit. |
| Who uses it | Sole proprietors/partnerships < CHF 500k sales. | ≥ CHF 500k sales and all legal entities (AG/GmbH). |
| Stakeholders | OK for small businesses/compliance. | Preferred by banks/investors; deeper analysis. |
Quick checklist
- Eligibility: Prior-year sales < CHF 500,000 → EAR allowed.
- Method: Record cash receipts/payments; keep a year-end assets/debts overview.
- VAT: Check registration (CHF 100,000 threshold) and choose method (effective vs net tax rate).
- Filing: Include result in your personal return; attach EAR statements per canton.
- AHV/IV/EO: Register and budget contributions.
Common pitfalls
- Not switching to full accounting after crossing the CHF 500k sales threshold.
- Mixing VAT into profit under the effective method (record net of VAT).
- Skipping the asset/debt statement (still required with EAR).
- Choosing the wrong VAT method (effective vs Saldosteuersatz) for your margin model.
- Forgetting AHV/IV/EO registration when income increases.
Deadlines at a glance
- Personal tax return: Cantonal deadlines vary; extensions commonly available.
- VAT returns: Due within 60 days after the reporting period.
- AHV/IV/EO: Advances during the year; final settlement after assessment.
Transitioning to full accounting
If your sales reach or exceed CHF 500,000, implement double-entry bookkeeping from the next financial year. Prepare an opening balance sheet, recognize receivables/payables and inventories, and align VAT, tax and social-security reporting.
Mini examples
Example 1 — Cash receipt timing
You invoice CHF 5,000 on 20 December and receive payment on 5 January. Under EAR, record the income in January (payment date).
Example 2 — Annual insurance
You pay an annual liability insurance premium on 8 January. Under EAR, the entire payment is January expense (no accrual); the asset statement reflects the cash/bank movement.
Example 3 — Small equipment
You buy a CHF 600 office chair and pay immediately. Often expensed in the year of payment; larger equipment is depreciated using Swiss tax rates.
Frequently asked Questions about Swiss Cash Basis Accounting:
ℹ️ Click a question to reveal the answer:
Who may use the Einnahmen-Ausgaben-Rechnung (EAR) in Switzerland?
Sole proprietors and partnerships with sales < CHF 500,000 in the last financial year may keep an income-expense account and a statement of assets instead of full double-entry books. :contentReference[oaicite:20]{index=20}
Who must keep full double-entry books under Swiss law?
Businesses with sales ≥ CHF 500,000 and all legal entities must keep proper accounts and prepare financial statements per Art. 957 ff. CO. :contentReference[oaicite:21]{index=21}
What does the EAR include at year-end?
An income-expense statement (cash basis) and a statement of assets & liabilities (e.g., bank, equipment, loans). :contentReference[oaicite:22]{index=22}
How are assets treated under the EAR?
Assets used over several years are typically depreciated following Swiss tax practice; small tools may be expensed immediately by materiality.
What are the current Swiss VAT (MWST) rates?
8.1% standard, 2.6% reduced, and 3.8% for accommodation (since 1 Jan 2024). :contentReference[oaicite:23]{index=23}
When do I have to register for Swiss VAT?
Generally once annual taxable turnover reaches CHF 100,000. For foreign businesses, worldwide turnover may be considered if they make Swiss-taxable supplies. :contentReference[oaicite:24]{index=24}
Which VAT accounting methods exist in Switzerland?
The effective method (input tax deduction) and the net tax rate / Saldosteuersatz method (flat % of turnover). Returns can be based on agreed vs. received consideration. :contentReference[oaicite:25]{index=25}
How do EAR figures flow into my Swiss tax return?
You include the business result in your personal return as self-employed income and attach the EAR statements. Business assets/debts impact wealth tax. :contentReference[oaicite:26]{index=26}
Do I have to submit my records electronically?
Most cantons support or require e-filing (e.g., eTax). Follow your canton’s instructions on attachments. :contentReference[oaicite:27]{index=27}
Are there Swiss “10-day rule” timing exceptions like in Germany?
No identical rule. Under EAR, the income-expense view is generally cash based; no regular accruals are posted in the statement (but the assets/liabilities overview is still required). :contentReference[oaicite:28]{index=28}
How is private use (e.g., car, phone) handled?
Allocate business vs. private use reasonably (e.g., logbook). Only the business share is deductible; adjust input VAT where applicable.
How often do I file Swiss VAT returns?
Typically quarterly (some businesses semi-annually or monthly), due within 60 days after period end. :contentReference[oaicite:29]{index=29}
Is there Swiss trade tax like in Germany?
No separate trade tax. Sole proprietors pay income tax (federal, cantonal, communal) on profits and wealth tax on net assets at the cantonal/communal level.
Do I need an inventory under EAR?
The income-expense statement remains cash-based, but your asset statement should reflect material stocks and debts at year-end.
How are losses treated for a sole proprietor?
Losses reduce your taxable income in the personal return. Cantonal carryforward rules apply; check your canton for specifics.
What social insurance contributions apply to self-employed persons?
AHV/IV/EO contributions based on profit; registration often required once activity is more than incidental (guidance mentions CHF 2,300/year). :contentReference[oaicite:30]{index=30}
Can I switch from EAR to double-entry voluntarily before hitting CHF 500k?
Yes. Many businesses adopt double-entry earlier to meet bank/investor expectations and to manage inventory/receivables.
How do VAT flat rates (Saldosteuersatz) interact with EAR?
They’re independent choices. EAR is a bookkeeping simplification; Saldosteuersatz is a VAT settlement method—often simpler for small businesses. :contentReference[oaicite:31]{index=31}
How should I document private drawings (Entnahmen) and injections (Einlagen)?
Track them clearly to separate business and private spheres. They affect equity/wealth but not profit directly.
What happens once I cross the CHF 500k sales threshold?
Implement double-entry bookkeeping from the next financial year and prepare full financial statements under OR/CO. :contentReference[oaicite:32]{index=32}
Sources
- Swiss Code of Obligations, Art. 957 ff. (accounting & reporting). :contentReference[oaicite:33]{index=33}
- Swiss VAT rates and obligations (ESTV/FTA). :contentReference[oaicite:34]{index=34}
- VAT methods: effective vs. net tax rate (Saldosteuersatz). :contentReference[oaicite:35]{index=35}
- Self-employment tax & filing guidance for SMEs. :contentReference[oaicite:36]{index=36}
- AHV/IV/EO guidance for self-employed. :contentReference[oaicite:37]{index=37}