Hi all
I would like to specify whether the economic consequences of COVID-19 can be taken into account in the 2019 financial statements by booking a special provision?
How it will be treated for tax purposes? Is there anybody who has already submitted the FS with such provision to the tax authorities? Was it accepted? Could you please share your experience?
Thanks!
Hi
Most tax administrations in Switzerland are of the opininon that the formation of a COVID-19 provision in 2019 FS does not relate to the 2019 period and is therefore not accepted for income tax purposes. However, certain cantons accept it.
It highly depends on your canton of residence. It means that the experience of entrepreneurs from Thurgau may not be relevant for your company which is located in e.g. Zuerich.
It would be great if you could share your entity details (seat, legal form) in order to receive a precise answer.
Regards,
Lana
Hi
Seat: Menzingen, Zug
Legal form: GmbH
The Canton of Zug applies the following requirements:
The extraordinary provision created in 2019 must be reversed in the 2020 financial statements.
Regards,
Lana
So if e.g. EBT equals to CHF 100'000, I can post a provision of CHF 50'000 in FY 2019, right?
For tax purposes it would be better to consider a net income as a basis for calculations, not EBT. It means that such provision should not exceed 50% of a profit after tax (excluding extraordinary factors such as capital gains on disposals and revaluation gains).
Regards,
Lana
How should it be correctly reported / presented in the FS? Are there any special requirements?
The COVID-19 provision related posts should be presented as separate line items in the financial statements:
In notes to the financial statements you can also describe an impact of coronavirus on your business and provide some arguments for the provision to be recognized.
