Gift vouchers and prepaid vouchers: accounting, VAT and breakage revenue for Swiss SMEs

Restaurants, shops, wellness centres and service businesses increasingly sell gift vouchers and prepaid vouchers. For the customer it is a simple gift; for the company it represents immediate cash receipt that, however, does not coincide with revenue already earned. Until the moment of use — or expiry — the amount received constitutes an obligation for future performance toward the voucher holder.

In Switzerland, accounting follows the temporal matching and realisation principle (art. 958b and 958c CO) and VAT practice regarding value vouchers (multi-purpose) and service vouchers (single-purpose), consolidated by the Federal Tax Administration (FTA) and the Federal Administrative Court (A-2587/2020). Approximate management leads to recurring errors: VAT settled too early or too late, inflated revenue at the time of sale, transitory liabilities forgotten at year-end and undocumented breakage.

This guide explains how to structure the complete cycle — issuance, partial or full redemption, expiry and reversal — with practical examples for VAT-registered SMEs and guidance for annual closing. References are updated to 2026 and consistent with Swiss accounting practice (Swiss GAAP FER).

The most common error is including the entire gift voucher receipts in the taxable base for the sale period, even for multi-purpose vouchers. In this case VAT is settled too early and must be adjusted in the subsequent VAT return, with possible default interest.

For multi-purpose vouchers (value vouchers), the amount received at issuance does not enter field 200 (total consideration) until redemption occurs. Maintain a subsidiary register linking each issued voucher to the redemption period: this simplifies reconciliation with the general ledger and VAT return preparation.

For service vouchers (single-purpose), VAT arises at issuance and the amount must be included in field 200 of the sale period; no further VAT liability arises at redemption. If the customer redeems a service worth less than the voucher, the surplus may remain available to the holder (transitory liability) or, if contractually provided and after expiry, flow into breakage — with related tax implications and, for service vouchers, possible adjustment of VAT already settled.

"Breakage" refers to the portion of issued vouchers that is never redeemed — because lost, forgotten or expired. It represents real revenue for the company, but its accounting recognition is subject to the prudence principle (art. 958c and 960 CO): you may record it as revenue only when the performance obligation has definitively and documentably ceased.

Expiry of the performance obligation follows the Code of Obligations (CO): generally five years for current consumer goods and services (art. 128 CO) and ten years for more significant services such as stays or travel (art. 127 CO). A shorter contractual validity cannot shorten these periods (art. 129 CO). An excessively short or uncommunicated expiry may be challenged by the customer; as long as the obligation persists, the transitory liability cannot be reversed to revenue.

In the balance sheet, the balance of the gift vouchers issued account must match the value of vouchers still valid and unredeemed. Perform a reconciliation between the voucher register (active codes) and the accounting balance as at 31 December: any differences must be investigated before the financial statements are published.

Verify that the period's VAT does not include receipts from unredeemed multi-purpose vouchers. Check vouchers that expired during the financial year but have not yet been accounted for as breakage: they must be processed before closing or, at the latest, in the first months of the following financial year if expiry falls at the end of December.

In the notes to the financial statements (if applicable), state the policy adopted for gift vouchers — single-/multi-purpose classification, duration, breakage recognition method — in line with what is declared to the Federal Tax Administration (FTA).

Accounting software such as Accountex simplifies the voucher cycle if the process is configured from issuance onwards. Create a "Gift voucher" product or service with a revenue account linked to the transitory liability, not directly to the sales account. This way every gift voucher invoice or receipt automatically feeds account 227x.

At redemption, record an internal credit note or usage document that reverses the liability and generates revenue with the correct VAT rate. If you operate with numbered codes, use the document reference or notes field to track the voucher code: essential for audits and reconciliations.

Use account and period reports to extract movements on gift vouchers issued, redeemed and reversed. Ahead of the quarterly VAT return, a dedicated extract avoids confusing voucher receipts with revenue already earned. For breakage, set an expiry reminder or a monthly check on vouchers inactive for over 12 months: this reduces the risk of "dormant" liabilities weighing on long-term liabilities.