VAT audits in Switzerland: preparation, process and follow-up

What a VAT audit examines

The Federal Tax Administration (FTA), called the AFC in French and ESTV in German, checks whether a business has correctly fulfilled its VAT obligations. The review can cover sales, input tax, purchases from abroad, tax rates and reporting methods. An audit notice alone does not establish fraud.

The most useful preparation is a clear audit trail: the real transaction, its supporting document, the accounting entry and its treatment in the VAT return. Reconcile totals and document unusual transactions. At the end, distinguish tax adjustments, possible interest and the procedure for challenging a finding.

Read the notice and identify the periods concerned

The FTA generally contacts the business to arrange the review and specify the records required. Read the scope, dates and practical arrangements, then forward the notice to your accountant or VAT adviser. Agree who prepares the files, answers questions and approves explanations.

The ordinary limitation period for assessment is five years from the end of the relevant tax period, but interruption and suspension rules can affect it. An absolute ten-year limit also applies to this assessment right. An audit announcement can itself affect limitation. Do not assume that every period more than five years old is automatically closed.

These rules do not mean that every business must undergo an audit every five years. Selection frequency and limitation are separate issues. A VAT audit is also distinct from an AVS employer audit: a social-insurance review does not validate VAT returns.

Documents to prepare

The FTA’s specific request determines the final list. Index records by period and make it possible to locate the corresponding entries. Thousands of unstructured PDFs do not create a usable audit trail.

For international supplies, retain the customer’s identity, the nature and relevant location of the supply, contracts and evidence. A foreign billing address alone does not justify a particular treatment. The general retention period is ten years; special rules include twenty years for relevant real-estate documents, with limitation rules also affecting retention. Changing software or deregistering for VAT does not remove archiving obligations.

Reconcile the figures and test the audit trail

Start with annual accounts and filed returns. Reconcile turnover by period and VAT category. Explain timing differences, the reporting basis, non-taxable receipts and corrections already submitted. The annual VAT reconciliation provides a useful foundation: unexplained balancing entries are not a substitute for identifying differences.

Next review VAT ledger accounts, foreign purchases, fixed assets and unusual transactions. Trace representative transactions in both directions, from invoice to ledger to return and back again.

Worked example: a CHF 10,000 sale excluding tax at 8.1% corresponds to a CHF 10,810 invoice and CHF 810 VAT. Establish the correct reporting period. If the tax is absent from that return, investigate a credit note, correction, timing difference or error.

Keep a list of open questions with facts, evidence and treatment adopted. If an error is identified before or during the audit, determine how to disclose and correct it within the ongoing process. Preserve the original records and the correction rather than reconstructing an artificial history.

What happens during the review?

Sales and classification

The auditor may check completeness of revenue, place of taxation, rates and claimed exemptions. Explain financing movements or other receipts that are not turnover. Contracts can be as important as invoices, especially for supplies containing several components.

Input tax and private use

Deductibility depends on the relevant conditions, business use and supporting evidence. Private expenditure, exempt activities and changes in asset use can require adjustments. Recognition as an accounting expense does not automatically establish full VAT recovery.

Foreign purchases and simplified methods

Review Swiss acquisition tax on relevant foreign services. For businesses using the net tax rate method, checks may cover activity classifications, authorised rates, limits and changes of method. Distinguish rules effective since 2025 from those governing earlier periods.

Sampling

The review can involve samples and, in appropriate circumstances, extrapolation. If findings are extended to a wider population, examine which transactions are included and whether the sample represents them. Additional evidence may explain a different activity or a change during the period. Respond to documented facts and calculations rather than giving general assurances.

Findings, interest and disagreements

The results are discussed and the relevant amounts set out in an assessment notice where applicable. The statutory framework provides for completion by an assessment notice within 360 days of the written announcement. Ask for adjustments by period and reason, and compare them with supporting evidence, historical rates and corrections already filed to avoid double counting.

An adjustment can increase the tax due or benefit the business. Additional tax, late-payment interest and a possible penalty are separate matters. An unintentional error can produce tax and interest without automatically producing a fine.

The applicable federal late-interest rate is 4.0% for 2026. Do not apply it indiscriminately to all previous years: historical rates and relevant dates must be established.

Assessment notice versus formal decision

A notification d’estimation, or assessment notice, must not automatically be treated as a formal decision. If you disagree, it may be necessary to request a formal FTA decision. Article 83 of the VAT Act provides for an objection within 30 days of notification of a decision.

Written acceptance or payment without reservation of an assessment notice can make the tax claim final. Before accepting or paying a disputed amount, review the procedure and any necessary reservation. Coordinate this with payment deadlines and interest rather than ignoring them. A useful challenge identifies the transactions, amounts, applicable rules and evidence.

Make the next audit easier

Build regular review into year-end accounting and VAT reporting. Record the treatment of new activities, foreign suppliers, exempt supplies and changes in property use when they arise.

This does not guarantee that there will be no adjustment. It makes returns more reliable and discussions more precise. The common Swiss VAT mistakes provide further practical checks.

Frequently asked questions