VAT Audit Switzerland: Top 10 VAT Risks Identified by SFTA

Since 2022, revenue from audits conducted by the Swiss Federal Tax Administration (SFTA-VAT) has shown steady growth. This trend is driven by an increased focus on complex data flows and increasingly sophisticated digital data analysis.

In this context, a VAT adjustment can significantly impact a company's cash flow, particularly as the default interest rate has reached 4.75% in 2026.

The following points highlight the ten primary risk vectors identified during recent VAT audits.

Top 10 major VAT risks

1. Revenue and accounting reconciliation:

Any discrepancy between the annual turnover reflected in the financial statements and the amounts declared in VAT returns is the primary red flag during a VAT audit.

2. Acquisition of services from abroad (reverse charge):

Overlooking the reverse charge mechanism on services received from foreign providers, such as consulting, IT licenses, or digital advertising, remains a recurring error.

3. Input tax deduction documentation:

Input tax recovery is frequently challenged due to incomplete or missing invoices, or failure to comply with digital archiving standards.

4. Private use and benefits in kind:

Any economic benefit consumed outside the scope of taxable business activities must be adjusted. This notably includes the mixed use of company vehicles and various benefits provided to staff.

5. Donations, Subsidies vs. Sponsoring:

An incorrect analysis of the nature of these funds can lead to a proportional reduction of the input VAT deduction right. The (often subtle) distinction between a donation, a subsidy, or a taxable supply is a major focal point for the SFTA-VAT.

6. Intra-group recharges:

Intercompany flows are subject to close scrutiny by the SFTA-VAT. Incorrect VAT treatment of cost recharges or management fees is a frequent cause of VAT correction.

7. Proof of export:

To apply a 0% rate on the delivery of goods abroad, holding valid and official proof of export is mandatory. A simple commercial invoice or internal transport document does not constitute sufficient proof for the SFTA-VAT. In the event of an audit, the absence of conclusive customs documentation can lead to the transaction being requalified as a domestic sale.

8. Reduction of input VAT deduction right:

When an entity performs supplies VAT exempt without credit, a proportional reduction of input tax must be applied. The calculation methodology must be rigorously documented and justified.

9. Restructuring and asset transfers

During mergers, restructuring, or asset transfers, the application of the "notification procedure" is often perceived as a mere formality. However, if the underlying conditions are not scrupulously met, the SFTA may reclassify the transaction as a taxable supply.

10. System integrity and digital audit trail:

In the digital age, the SFTA no longer relies solely on paper invoices. The focus is now on a reliable audit trail: the company's ability to demonstrate an unbroken link between the commercial transaction, the accounting entry, and the VAT return. Incorrect VAT code configuration in the ERP or deficient electronic archiving can lead the authorities to reject the accounting records and proceed with significant VAT adjustments.

How RSM Switzerland can assist you?

Proactive planning remains the most effective way for transforming tax uncertainty into controlled management. Backed by extensive experience in supporting companies during VAT audits conducted by the SFTA-VAT, RSM Switzerland intervenes both in the preparatory phase and through technical assistance during the audit itself.

RSM Switzerland is at your disposal to provide expert support. Should you require our assistance, please do not hesitate to contact our VAT team.