RSM Tax Update

A Guide for Tax Managers and Accountants

While tax calculation generally takes center stage in advisory services, the formal collection process is often neglected in practice. However, the cantonal collection regime decisively determines the effective financing costs of a tax bill. For the 2025 tax year, the federal government and the cantons have adjusted their interest rates to the changed market environment—with sometimes significant consequences for cash management.

This article is aimed at accountants and tax managers and sheds light on the mechanics of tax collection for legal entities with a standard financial year ending on December 31st. We analyze the Direct Federal Tax (DFT) as well as the tax collection systems of the cantons of Zurich, Zug, Geneva, and Vaud to highlight where interest-bearing overpayments still make sense and where expensive interest traps lurk.

The Foundation: Invoice-Based vs. Tax Liability-Based

For effective liquidity management, a distinction must be made between the two fundamental systems of tax collection:

Invoice-based systems: For the Direct Federal Tax, only the formal (provisional or final) invoice triggers the due date. If this invoice is paid on time, no default interest applies—even if the provisional invoice is lower than the eventual effective tax liability. A compensatory interest system generally does not exist.
Tax liability-based systems (e.g., Cantons ZH, ZG, GE, VD): The cantons operate with a compensatory interest mechanism. Interest is calculated on the final tax amount of the definitive final assessment starting from a fixed reference date. Differences between payments on account (installments) and the effective tax liability systematically accrue positive or negative interest, completely independent of whether the provisional invoice was paid on time. However, there are differences regarding the reference dates for interest calculation.

Parameters and Deadlines for the 2025 Tax Year (Dec 31st Year-End)

For a company with a financial year ending on December 31, 2025, the following specific parameters apply in the collection process.

1. Direct Federal Tax (DFT): Elimination of Prepayment Bonuses

Here, the timely settlement of the outstanding provisional or final invoice is critical.

Due date: March 1, 2026 (Payment period: 30 days, i.e., until March 31, 2026).
Remuneratory interest (2026): 0.0% (Previous year: 0.75%).
Default interest (2026): 4.0%.
Cantonal differences in collection: Although the interest rates and the due date (March 1) are uniformly fixed by law nationwide, the DFT is administratively collected by the cantons. In practice, this leads to slight differences: the timing of when the provisional invoice is sent, the design of the tax portals, and the option to make voluntary installment payments before maturity depend on the practices of the respective cantonal tax administration. The interest mechanics, however, remain strictly identical everywhere.
Practice Note: If you request an adjustment of the provisional invoice due to significantly higher profits, the interest liability for the additional amount only arises 30 days after the new invoice is issued. Due to the 0.0% rate, prepayments before March 1, 2026, no longer provide any commercial benefit.

2. Canton of Zurich (ZH): October 1st as the Reference Date

In contrast to the DFT, Zurich applies a tax liability-based system with compensatory interest. It is not enough to merely pay the provisional invoice (installments) on time.

Interest-relevant reference date: October 1, 2025.
Compensatory interest (2026): 0.75% (symmetrical for over- and under-coverage of the final tax liability).
Default interest (2026): 4.5% (only applies after the 30-day payment period of the final assessment has expired).
Practice Note: If the effective tax liability for 2025 is CHF 1 million higher than provisionally invoiced, this shortfall costs 0.75% p.a. starting October 1, 2025—even if the original provisional invoice was paid in full. Payments on account should therefore be actively adjusted to the expected annual profit before October 1st.

3. Canton of Zug (ZG): Focus on Avoiding Defaults

For legal entities with a year-end on December 31, the due date in Zug falls on March 1 of the following year. Zug waives the early payment discount incentives for legal entities that apply to natural persons.

Due date: March 1, 2026.
Compensatory / Remuneratory interest (2026): 2.0%.
Default interest (2026): 4.0%.
Practice Note: The default interest of 4.0% strictly begins after the 30-day payment period of the respective provisional or final invoice expires. If provisional installments are paid on time, a fair compensatory interest of 2.0% is granted on any differences.

4. Canton of Geneva (GE): The Asymmetrical Interest Trap

Geneva operates a system that penalizes shortfalls and virtually ignores overpayments. Provisional taxes are levied in 12 monthly installments.

Monthly installment evaluation: At the level of payments on account, each month is considered separately. Missed, late, or insufficient installments are subject to interest in favor of the tax administration even during the current year. The instalments are payable on a monthly basis and must be settled no later than the 10th day of the following month.
Interest-relevant reference date (shortfall): In Geneva, monthly instalments that are insufficient or paid late accrue interest at a rate of 2.6% from their respective due dates during the tax year. Where there is an overall shortfall compared to the final tax liability, a negative compensatory interest charge at the same rate subsequently applies as from 1 January of the year following the tax period (for a financial year ending on 31 December 2025, as from 1 January 2026).
Positive compensatory interest / Remuneration (2026): 0.1%.
Interest on instalments / Negative compensatory interest / Default interest (2026): 2.6%. The 2.6% rate applies, on the one hand, to monthly instalments that are paid late or are insufficient, as from their respective due dates during the tax year. On the other hand, the same rate applies to any overall shortfall compared to the final tax liability as from 1 January of the following year. It also applies to any late payment of the final tax assessment after 30 days (default interest).
Practice Note: This represents the most significant liquidity risk. If the expected profit exceeds the amounts invoiced as instalments, these must be increased before the end of 2025. Failing this, insufficient instalments will accrue interest at a rate of 2.6% from their respective due dates during the tax year, and, in the event of an overall shortfall, a negative compensatory interest charge of 2.6% will subsequently apply to the difference compared to the final tax liability as from 1 January 2026.

5. Canton of Vaud (VD): Minimal Compensatory Interest

The Canton of Vaud levies cantonal taxes for legal entities in three instalments and for individuals in twelve instalments. The instalments must be paid by their respective due dates, failing which default interest applies. By contrast, in the current environment, the interest impact arising from differences between instalments paid and the final tax liability remains limited, given the low level of the compensatory interest rate.

Interest-relevant reference date: Vaud does not have a blanket reference date for the entire tax liability like Zurich, for example. Instead, the interest calculation is linked to the due dates of the individual installments. The compensatory interest is calculated based on the deviations at these respective due dates.• Compensatory interest (2026): 0.125% (symmetrical).
Default interest (2026): 4.0% (applies in the event of late payment of installments or the final invoice).
Practice Note: A strategic overpayment is probably not worthwhile here due to the marginal 0.125% rate. Primarily, it is important to strictly adhere to the installment deadlines to avoid the 4.0% default interest.

Strategic Takeaways for Tax Management

Stop DFT prepayments: "Interest parking" with the Federal Tax Administration is obsolete from 2026 onward. Payments should be scheduled exactly for late February / early March 2026 to keep liquidity usable internally.
Proactively manage Geneva: For Geneva-based companies, an exact tax forecast before year-end (December 31, 2025) is essential. Due to the asymmetry (0.1% vs. 2.6%), it is better to tolerate a slight overpayment rather than a shortfall here.
Zurich review in Q3: Set a review date in mid-September for companies based in Zurich. Increase provisional invoices that are too low and make the payment before the October 1 reference date to avoid negative compensatory interest (0.75%).

Active management of the tax collection process is, more than ever, an instrument for yield optimization in 2026. We would be happy to support you in orchestrating your group-wide payment flows in accordance with cantonal specifics.