The statutory default interest rate in Switzerland is 5% per year, regulated in OR Art. 104. Swiss Code of Obligations (OR) Art. 103 adds: as soon as the debtor falls into default, they automatically owe default interest — without the creditor having to prove a concrete loss.

That's a key difference from damages. For damages, you'd have to prove that the late payment cost you a specific amount (e.g. a surcharge on an overdraft facility). You get default interest without that proof — it's defined by law and is yours automatically.

Default interest vs. loan interest — the difference

Loan interest is the contractually agreed rate for a loan or credit line (e.g. 2% p.a. on a business credit). Default interest only kicks in when a due receivable is not paid. It's a penalty for late payment, not a price for borrowed money. Anyone who sends invoices as a freelancer shouldn't confuse the two — only default interest runs automatically once default begins.

When does OR Art. 104 apply, and when OR Art. 103?

OR Art. 104 provides the statutory interest rate (5% p.a.). OR Art. 103 regulates that this interest is owed in default — even without proof of loss. Both articles apply together. If you want a higher rate in B2B, you have to agree it contractually — for example 8% or 10% in your AGB (terms and conditions). Toward consumers, the statutory 5% rate is binding; a contractual surcharge could qualify as usury.

Who does default interest apply to?

Default interest applies to all monetary debts — regardless of whether you're an Einzelfirma (sole proprietorship), GmbH, AG, or a consumer. It applies in B2B as well as B2C, with one difference: in B2B you can raise the rate contractually, in B2C you can't. It's practically most relevant for freelancers, agencies, tradespeople, and service providers who bill on invoice and regularly deal with late payers.

The essentials at a glance

• Default interest = 5% p.a. — regulated in OR Art. 104, owed from default without proof of loss (OR Art. 103)
• Calculation: gross amount (incl. MWST) × 5% × days in default / 365 — at CHF 10,000.00 and 90 days that's CHF 123.29
• No MWST on default interest — it's not taxable, but it's calculated on the gross amount (incl. MWST)
• B2B: higher rate possible — agree e.g. 8% in your AGB to discipline late payers harder
• The due date is decisive — without a clear date on the invoice, you have to send a reminder before interest starts running

Calculating default interest — the formula

The calculation is simple, but the details matter. The formula is:

Default interest = principal claim × interest rate × (days in default / 365)

The individual components:

• Principal claim = gross amount of the invoice (incl. MWST 8.1%)
• Interest rate = 5% (0.05) by law, or the agreed rate
• Days in default = days from the day after the due date until payment is received
• 365 = days per year (standard in Switzerland, not 360)

Step-by-step guide

1. Determine the gross amount: Take the invoice total incl. MWST. At CHF 1,000.00 net + CHF 81.00 MWST, that's CHF 1,081.00.
2. Determine the due date: If a date is on the invoice, that's the due date. Without a date, the legal default is 30 days after receipt.
3. Count days in default: From the day after the due date until payment arrives. Example: due April 14, paid May 20 = 36 days (April 15 through May 20).
4. Calculate the interest: Gross amount × 0.05 × (days in default / 365).

Example 1: Sarah, graphic designer from Zurich

Sarah sent an invoice for CHF 3,500.00 on March 15, 2026. The payment term is 30 days — so the due date is April 14. Her customer doesn't pay until May 20. Days in default: 36 (April 15 through May 20).

Calculation:

CHF 3,500.00 × 5% × (36 / 365) = CHF 3,500.00 × 0.05 × 0.0986 = CHF 17.26

Sarah can claim CHF 17.26 in default interest. A small amount — but she could have agreed 8% contractually, which would be CHF 27.62. And with larger claims, it adds up quickly.

Example 2: Markus, carpenter from Bern

Markus billed a work contract for CHF 12,000.00. The payment deadline was June 1. The customer pays on July 31 — 60 days in default.

Calculation:

CHF 12,000.00 × 5% × (60 / 365) = CHF 12,000.00 × 0.05 × 0.1644 = CHF 98.63

Markus can show CHF 98.63 in default interest on the reminder. If he had drawn up a work contract beforehand and agreed 8% interest there, the interest would be CHF 157.81 — significantly more. Anyone in B2B who regularly experiences late payments should adjust the interest rate contractually.

Example 3: Mixed invoice with partial payment

Anna, a web designer, sent an invoice for CHF 8,000.00. Due date June 30. The customer pays CHF 4,000.00 on July 15 and the remaining CHF 4,000.00 on August 30. How is the default interest calculated?

• First segment: CHF 8,000.00 × 5% × (15/365) = CHF 16.44 (for the first 15 days, full amount)
• Second segment: CHF 4,000.00 × 5% × (46/365) = CHF 25.21 (remaining CHF 4,000.00 from July 16 through August 30)
• Total: CHF 16.44 + CHF 25.21 = CHF 41.65

With partial payments, recalculate the interest per segment — always on the still-open amount.

Example table: default interest at 5% p.a.

The table shows: at CHF 25,000.00 and 90 days in default, that's over CHF 300.— that you're legally entitled to. Many freelancers waive it — wrongly.

Online calculator vs. manual calculation

You can calculate default interest by hand or use an online calculator. The advantage of manual calculation: you understand what's happening and can explain the interest plausibly on the reminder. The advantage of a tool: speed and fewer typos. With invoicing software like Magic Heidi, you put the default interest on the reminder automatically — including correct day counting.

When does default interest start?

Default interest begins on the day after the receivable's due date. The due date is the point at which the debtor must perform. That's either:

• Agreed contractually (e.g. "payable within 30 days")
• By law: 30 days after invoice receipt, if nothing was agreed
• Tied to a specific performance (e.g. "after acceptance of the work")

Important: default does not start on the invoice date. It starts the day after the due date expires. If you send an invoice on March 1 with a 30-day term, the due date is March 31. Default interest runs from April 1.

Do you need a reminder?

No — if the due date is determined. OR Art. 102 says: if the due date is determined by contract, invoice, or law, the debtor automatically falls into default as soon as the deadline expires. A reminder isn't needed then.

But if the invoice states no payment term and nothing was agreed contractually, you have to send a reminder before default interest starts. That's a common mistake that costs freelancers thousands of francs every year.

Mini-story: Lena, speech therapist from Basel

Lena treated a patient and sent the invoice by QR-Rechnung (Swiss QR-bill). The invoice shows no due date — only "payable within 30 days." Legally, that's a determination, but Lena forgot to state the date explicitly as a date. The patient pays only after 80 days. Lena wants to claim default interest from day 31 — but since the date wasn't clearly determined, she has to send a reminder first. Serious reminder sent, the claim becomes due 14 days later. Default interest starts running on day 15 after the reminder. Lesson: put a concrete due date on the invoice — for example "Payable by April 14, 2026."

What happens when the due date is disputed?

Sometimes the customer disputes that the claim was due at all — for example, because they're unhappy with the performance. In that case, the debtor isn't in default as long as the claim is seriously disputed. Default interest only starts running from the point at which the claim is legally established (e.g. by a court judgment or an arbitral award). This is regulated in OR Art. 102 para. 2.

Default interest and MWST — a common misconception

Many freelancers ask themselves: Is default interest subject to MWST? The answer from the ESTV (Swiss tax authority) is clear: no. Default interest doesn't count as taxable turnover because it's not consideration for a service. It's a penalty for late payment, not a price.

Which amount is the interest calculated on?

Default interest is calculated on the gross amount of the claim — i.e. incl. MWST. This follows from OR Art. 104, which refers to the "owed performance," and that's the full invoice amount the customer owes.

Example:

• Net invoice: CHF 1,000.00
• MWST 8.1%: CHF 81.00
• Gross: CHF 1,081.00

Default interest is calculated on CHF 1,081.00, not on CHF 1,000.00. At 30 days in default:

CHF 1,081.00 × 5% × (30 / 365) = CHF 4.44

How do you report the interest on the MWST return?

Default interest you receive is booked to a neutral account (e.g. 3700 "other income"), not as turnover. That way it doesn't appear on the MWST return. If you bill as a MWST-registered freelancer, you have to separate default interest from the taxable sum in the MWST period return. The ESTV practice on this has been consistent for years — you'll find it in the ESTV's MWST info sheets.

Common mistakes in MWST treatment

• Mistake 1: Calculating interest on the net amount. The gross amount is correct.
• Mistake 2: Booking default interest as turnover and accounting for MWST on it. That's wrong — default interest isn't taxable.
• Mistake 3: Showing default interest on a separate invoice with MWST. Correct is a neutral credit note without an MWST reference.

Payment terms in Switzerland — what applies?

Statutory basic rule

If you haven't agreed anything contractually, the statutory payment term is 30 days from invoice receipt. This is regulated in OR Art. 102 para. 2 and applies in B2B. Toward consumers, the term isn't fixed by law — here, stating it on the invoice is advisable. A detailed overview of all terms can be found in our guide on payment terms in Switzerland.

Recommendation: put a clear term on the invoice

Write a concrete due date on every invoice. For example: "Payable by April 14, 2026." That way, default interest starts automatically on April 15 — without a reminder. With Magic Heidi, you set the date per invoice in seconds.

Connection to default interest

No due date, no default. No default, no default interest. The payment term is the basic prerequisite for default interest. If you don't clarify the term, you effectively waive your right to interest.

Typical terms in the Swiss market

• 10 days: Common for small amounts, often with a cash discount
• 30 days: Standard in most industries
• 60 days: Rarer, usually for large orders with installment arrangements

If a customer wants an installment payment agreement, agree on the installments and due dates in writing. Default interest for a given installment only starts when that installment isn't received on time.

What about cash discounts and rebates?

Cash discount (payment deduction for fast payment) and default interest aren't mutually exclusive, but they're two sides of a coin. Cash discount is the incentive for on-time payment; default interest is the consequence for late payment. Practical tip: offer 2% cash discount for payment within 10 days, and charge 5% default interest from day 31. That makes the invoice attractive and disciplines payers.

Default interest — deductible for tax or not?

For creditors (you receive interest)

Default interest you receive is taxable income. As a freelancer or Einzelfirma, you report it on your tax return as "other income." For MWST purposes, it's not taxable (see above).

For debtors (you have to pay interest)

Default interest you pay as a business expense is deductible — as interest on debt under the "financial expense" position. Prerequisite: the claim is business-related. A freelancer who pays an invoice late and owes default interest on it can deduct that on their tax return.

Important exception: default interest on tax and MWST debts

Default interest you owe the ESTV or tax authorities for late tax payments is not deductible. This is regulated in Art. 33 DBG: sanctions and default interest on tax debts may not be deducted as professional expenses. The same applies to default interest on MWST debts — the ESTV treats it as a tax-related ancillary charge, not a business expense.

How do you book default interest correctly?

• Received default interest: Account 3700 "other income" (neutral, without MWST)
• Paid default interest: Account 6900 "financial expense" — interest on debt
• Default interest on tax debts: Private booking, not deductible

Anyone using accounting software can assign these accounts automatically. Manually, check at year-end that all default interest is classified correctly.

Default interest in practice — template for your invoice and reminder

Here's how to show default interest on the reminder in a legally sound way. Copy the building block and adjust the placeholders.

Text block: default interest on the reminder

Default interest per OR Art. 104 We charge default interest of 5% p.a. from due date per OR Art. 104. To date, CHF amount has accrued. The interest is calculated on the gross amount of CHF invoice total incl. MWST. Please transfer the total amount of CHF principal + default interest by date.

Sample calculation to copy

Invoice No. 2026-014
Gross amount (incl. MWST 8.1%): CHF 3,500.00
Due date: 14.04.2026
Payment received: 20.05.2026
Days in default: 36

Default interest: 3,500.00 × 0.05 × (36/365) = CHF 17.26

Total claim: CHF 3,517.26

When is default interest worth it?

For small amounts (under CHF 500.00), the interest is often symbolic. At CHF 10,000.00 and 90 days, it's CHF 123.29 — that's worth it. If you consistently apply the interest, it signals seriousness and reduces the number of late payers. Anyone who never claims it becomes a pushover.

Setting default interest in your AGB

Anyone in B2B who regularly deals with late payers should raise the default interest rate contractually in their AGB. A typical clause:

"In the event of payment default, we charge default interest of 8% p.a. from the due date, but at least the statutory default interest per OR Art. 104."

That gives you a legally sound higher rate without negotiating every invoice individually. In B2C, the clause only holds with the statutory 5% rate.

Next steps if the customer doesn't pay

1. Check the due date — is a date on the invoice?
2. Show default interest on the reminder (text block above)
3. After the reminder period expires: initiate debt collection
4. If needed: involve a lawyer or conciliation authority

Anyone who checks out Magic Heidi's pricing in advance knows: the software costs between CHF 25.— and CHF 39.— per month — significantly less than bexio at CHF 52.— per month. A cheaper alternative to bexio pays off if you want to automate invoices, reminders, and default interest.