Why deposits and connections deserve accounting attention
When a Swiss SME opens a new premises, relocates, or increases energy consumption, the grid operator — electricity, gas, water, or district heating — often requires a security deposit and payment of connection costs. These amounts can easily exceed CHF 5,000–20,000 and, if recorded incorrectly, distort the balance sheet, cash flow, and tax-relevant result.
In Switzerland there is no specific accounting law on utility deposits: treatment follows the Swiss Code of Obligations (CO), Swiss accounting standards (Swiss GAAP FER), and contracts with basic service providers. The fundamental distinction is between recoverable security deposits (balance sheet asset) and connection costs or infrastructure contributions (expense or fixed asset, depending on economic nature and ownership of the works).
This guide explains how to classify, record, and monitor energy deposits and connections in SMEs, with practical references for year-end closing and management with accounting software such as Accountex.
Types of charges: security deposit, connection fee, and contribution
Grid operator documents use different terminology. Here is an operational map for accounting:
| Item | Economic nature | Accounting treatment | Recovery |
|---|---|---|---|
| Security deposit / Kaution | Guarantee for supplier receivables; not a cost | Other current assets (receivables from third parties) or dedicated clearing account | Upon contract termination or after a period of good payment |
| Connection fee (Anschlussgebühr) | Cost to activate the point of delivery | Operating expense; capitalized only if works owned by the company with multi-year benefit and material amount | Not recoverable; possibly depreciated |
| Infrastructure contribution (Anschlussbeitrag) | Financing of works on the operator’s network; the customer typically does not acquire ownership | Generally operating expense or prepaid cost; capitalized only with documented multi-year contractual rights | Partial upon takeover or transfer, per contract |
| Reference capacity / grid security deposit | Guarantee linked to expected consumption or contracted capacity | Balance sheet asset while the restriction remains | Reduction or refund upon lower consumption |
| Base charge / Grundpreis | Periodic fee for network availability | Operating cost (energy, water, rent and expenses) | None — recurring cost |
When to capitalize and when to expense
Under Swiss GAAP FER, a cost is recorded as an asset if the company controls its multi-year economic benefit and the expense exceeds the materiality threshold defined by the company (typically CHF 1,000–5,000):
Capitalize (fixed asset)
- Connection or upgrade works owned by the company (e.g. internal electrical installation) with multi-year use and material amount
- Internal electrical upgrade costs that increase the value of the real estate asset (if owned by the SME)
- Connection costs to a new owned facility, with expected use beyond the current period and material amount
Depreciation over the estimated useful life (often 5–20 years, consistent with the lease contract or technical life of the connection).
Expense immediately (income statement)
- Security deposits — never a cost as long as the right to recovery is not lost
- Infrastructure contributions to the operator’s network (Anschlussbeitrag), unless documented multi-year contractual reimbursement rights exist
- Meter activation fees or administrative charges of modest amount
- Standard connections in leased premises, when the benefit does not exceed the lease term and the amount is below threshold
- Base charges and actual energy, gas, and water consumption
Under a lease, improvements that remain with the landlord are generally expensed, unless otherwise agreed contractually.
Accounting entries: chart of accounts and sample journal entries
An organized chart of accounts facilitates deposit monitoring and year-end reconciliation. Recommended structure for SMEs:
| Account | Description | Use |
|---|---|---|
| 1170 | Utility security deposits | Electricity, gas, water, district heating Kaution |
| 1530 | Fixed assets — connections and grid contributions | Capitalized connection works owned by the company |
| 6200 | Energy and utilities | Consumption, base charges, activation fees, and non-capitalized Anschlussbeiträge |
| 6800 | Depreciation of fixed assets | Annual charges on capitalized connections |
Sample journal entries
1. Electricity security deposit payment (CHF 3,000)
Debit 1170 Utility security deposits / Credit 1020 Bank — CHF 3,000
2. Standard connection expense (CHF 850, below threshold)
Debit 6200 Energy and utilities / Credit 1020 Bank — CHF 850
3. Capitalized company-owned connection (CHF 12,000)
Debit 1530 Fixed assets — connections / Credit 1020 Bank — CHF 12,000; at year-end: Debit 6800 Depreciation / Credit 1530 — annual charge
4. Deposit refund upon contract closure
Debit 1020 Bank / Credit 1170 Utility security deposits — amount refunded
VAT, income tax, and deposit recovery
VAT: Security deposits do not constitute consideration for a taxable supply: they generate neither input tax deduction nor output tax liability, as they do not remunerate a supply of goods or services. Connection fees and infrastructure contributions may however be taxable if the operator issues an invoice with VAT; a VAT-registered SME can claim input tax as a credit if the expense is allocated to taxable activity. Always verify the invoice: the standard rate is currently 8.1%; certain services from public or municipal entities may be exempt or outside the scope of VAT, depending on the applicable regime.
Income tax: Expenses deducted immediately reduce taxable profit in the period of accrual. Fixed assets are depreciated according to the accounting plan; tax-relevant depreciation, for companies with ordinary accounting (Art. 957 et seq. CO), follows the amounts recorded in the financial statements provided they are justified by commercial use (Art. 62 LIFD and corresponding cantonal legislation). Deposits do not affect profit as long as they remain active on the balance sheet.
Loss of deposit: If the supplier retains the security deposit for unpaid amounts or damage, the unrecoverable amount must be reclassified from asset to expense (account 6200 or dedicated account “Losses on deposits”) when the loss is final and documented.
Leasing, takeover, and relocation: what happens to deposits
Rented SMEs face recurring scenarios that require careful checks:
Contract takeover
If you take over the previous tenant’s supply contract, agree in writing with the operator on transfer of the deposit. In accounting terms: record the transferred deposit without a cash movement (with a possible counterpart to the transferor) or the new payment, attaching the operator’s confirmation.
Office relocation
Request refund of the deposit on the old point of delivery and pay a new one. Avoid informal netting without documentation: each location must have separate traceability in the deposit subsidiary ledger.
Non-recovered contributions
At the end of the lease, infrastructure contributions generally remain with the operator. Check clauses for partial reimbursement upon transfer; any recoveries should be credited to the income statement or, if capitalized, to the corresponding fixed asset.
Year-end checks and reconciliation
Before the annual closing, the administrative manager or fiduciary should complete this checklist:
- 1Reconcile each item on account 1170 with written confirmations from operators (deposit balance as at 31 December).
- 2Verify that deposits on terminated contracts have been collected or adjusted within the period.
- 3Calculate annual depreciation of fixed assets for connections and update the asset register.
- 4Check correct VAT allocation on connection invoices and archive contractual documentation.
- 5For deposits in foreign currency or with foreign operators (rare for local utilities), assess at the closing rate if material.
Managing deposits and connections with Accountex
Structured accounting software such as Accountex lets you keep deposits and utility costs under control without parallel Excel spreadsheets. Set up dedicated accounts in the chart of accounts, assign each grid operator to a subsidiary account, and record invoices and payments with reference to the point of delivery (POD/PDR).
For fixed assets, create asset cards linked to the lease contract or the duration indicated by the operator: Accountex automatically calculates depreciation and reports it at closing. Reports on receivables from third parties show deposits still restricted, useful for the cash flow statement and bank loan applications.
Document every transaction by attaching contracts, invoices, and refund confirmations: in the event of an audit or tax inspection, traceability between accounting and the operator contract is the SME’s primary defence.
Common mistakes to avoid
- ✕Recording the security deposit as an energy cost — inflates operating costs and removes a recoverable receivable from the balance sheet.
- ✕Capitalizing minimum-amount activation fees — weighs down assets and complicates depreciation without informational benefit.
- ✕Capitalizing Anschlussbeiträge on the operator’s network — the infrastructure remains owned by the operator; it should generally be expensed.
- ✕Forgetting the refund upon relocation — dormant deposits on closed contracts weigh down assets and mask missing receipts.
- ✕Claiming VAT on deposits — incorrect for tax purposes; correction during an audit generates late payment interest.
- ✕Confusing infrastructure contribution with base charge — distorts EBITDA and working capital requirements.