The statutory late payment interest in Switzerland is 5% per year, according to OR Art. 104 (Swiss Code of Obligations) and amounts to 5% per year. OR Art. 106 specifies: as soon as the debtor falls into arrears, they automatically owe the late payment interest — without the creditor having to prove a specific damages amount.

This is a key difference from damages compensation: for damages, you would have to prove that the late payment cost you a specific amount (e.g., a surcharge on an overdraft facility). You receive the late payment interest without this proof — it is legally defined and automatically yours.

Late payment interest vs. loan interest — the difference

Loan interest (Schuldzins) is the contractually agreed interest for a loan or credit line (e.g., 2% p.a. for a business credit). Late payment interest only kicks in when a due claim is not paid. It is therefore a penalty for late payment, not a price for providing money. Anyone who issues invoices as a self-employed person should not confuse the two — only the late payment interest accrues automatically in case of arrears.

When does OR Art. 104 apply, and when OR Art. 106?

OR Art. 104 provides the statutory interest rate (5% p.a.). OR Art. 106 regulates that this interest is owed in case of arrears — even without proof of damages. Both articles apply together. If you want a higher rate in B2B, you must agree on it contractually — for example, 8% or 10% in your terms and conditions. vis-à-vis consumers, the rate is capped at 5% (Art. 26 OR); a higher agreement is void.

Who does late payment interest apply to?

Late payment interest applies to all monetary debts — regardless of whether you are a sole proprietorship (Einzelfirma), GmbH, AG, or consumer. It applies in B2B as well as in B2C, with one difference: in B2B you can increase the rate contractually, in B2C you cannot. It is practically relevant primarily for freelancers, agencies, tradespeople, and service providers who work on invoice and regularly have late payers.

Calculating late payment interest — the formula

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

Late payment interest = principal claim × interest rate × (days in arrears / 365)

The individual components:

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

Step-by-step guide

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

Example 1: Sarah, graphic designer from Zurich

Sarah issued an invoice on March 15, 2026 for CHF 3,500.00. The payment term is 30 days — so the due date is April 14. Her client pays only on May 20. Days in arrears: 36 (April 15 to May 20).

Calculation:

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

Sarah can therefore claim CHF 17.26 in late payment interest. Small amount — but she could have agreed on 8% contractually, which would have been 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 client pays only on July 31 — 60 days in arrears.

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 late payment interest on the reminder. If he had concluded a work contract beforehand and agreed on 8% interest there, the interest would have been CHF 157.81 — significantly more. Anyone who regularly experiences late payments in B2B should adjust the interest rate contractually.

Example 3: Mixed invoice with partial payment

Anna, a web designer, issued an invoice for CHF 8,000.00. Due date: June 30. The client pays CHF 4,000.00 on July 15 and the remaining CHF 4,000.00 on August 30. How is the late payment 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 to August 30)
• Total: CHF 16.44 + CHF 25.21 = CHF 41.65

For partial payments, you recalculate the interest for each segment — always on the remaining outstanding amount.

Example table: Late payment interest at 5% p.a.

The table shows: with CHF 25,000.00 and 90 days in arrears, that's over CHF 300.00 that you are legally entitled to. Many freelancers forgo this — wrongly.

Online calculator vs. manual calculation

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

When does late payment interest start to accrue?

Late payment interest begins on the day after the due date of the claim. The due date is the point in time at which the debtor must perform. This is either:

• Contractually agreed (e.g., "payable within 30 days")
• Statutory: 30 days after receipt of the invoice, if nothing was agreed
• Upon a specific performance (e.g., "after acceptance of the work")

Important: arrears do not begin on the invoice date. They begin on the day after the due date expires. If you issue an invoice on March 1 with a 30-day term, the due date is March 31. The late payment interest accrues from April 1.

Is a reminder necessary?

No — if the due date is determined. OR Art. 102 (Swiss Code of Obligations) says: if the due date is determined by contract, invoice, or law, the debtor automatically falls into arrears as soon as the deadline expires. A reminder is then not necessary.

However, if the invoice shows no payment deadline and nothing has been agreed contractually, you must send a reminder before late payment interest starts accruing. This is 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 via QR-bill (QR-Rechnung, the Swiss QR-bill payment standard). The invoice does not show a due date — only "payable within 30 days." Legally, this is a determinate deadline, but Lena forgot to state the date explicitly as a date. The patient pays only after 80 days. Lena wants to claim late payment interest from day 31 — but since the date was not clearly determined, she must first send a reminder. Serious reminder sent, 14 days later the claim becomes due. From day 15 after the reminder, the late payment interest accrues. Lesson: write a concrete due date on the invoice — for example, "Payable by April 14, 2026."

What happens if the due date is disputed?

Sometimes the client disputes that the claim was due at all — for example, because they are dissatisfied with the service. In this case, the debtor does not fall into arrears as long as the claim is genuinely disputed. The late payment interest then only accrues from the point in time at which the claim is legally established (e.g., by a court judgment or an arbitration award). This is regulated in OR Art. 102 para. 2 (Swiss Code of Obligations).

Late payment interest and MWST — a common misconception

Many freelancers ask themselves: Is late payment interest subject to VAT? The answer from the ESTV (Swiss Federal Tax Administration) is clear: No. Late payment interest does not belong to the taxable turnover because it is not consideration for a service. It is a penalty for late payment, not a price.

On which amount is the interest calculated?

The late payment interest is calculated on the gross amount of the claim — i.e., incl. MWST (VAT 8.1%). This follows from OR Art. 104, which refers to the "owed performance," and that is the full invoice amount that the client owes.

Example:

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

The late payment interest is calculated on CHF 1,081.00, not on CHF 1,000.00. For 30 days in arrears:

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

How do you report the interest on the VAT return?

Late payment interest you receive is booked to a neutral account (e.g., 3700 "other revenue"), not as turnover. This means it does not appear on the VAT return. If you report as a VAT-liable self-employed person, you must separate late payment interest from the taxable sum in the VAT period return. The ESTV practice on this has been consistent for years — you can find it in the MWST information from the ESTV.

Common mistakes in VAT treatment

• Mistake 1: Calculating interest on the net amount. The correct basis is the gross amount.
• Mistake 2: Booking late payment interest as turnover and charging VAT. This is wrong — late payment interest is not taxable.
• Mistake 3: Showing late payment interest on a separate invoice with VAT. Correct is a neutral credit note without a VAT reference.

Payment terms in Switzerland — what applies?

Statutory basic rule

If you have not agreed anything contractually, a statutory payment term of 30 days from receipt of the invoice applies. This is regulated in OR Art. 102 para. 2 (Swiss Code of Obligations) and applies in B2B. vis-à-vis consumers, the term is not fixed by law — here, stating it on the invoice is advisable.

Recommendation: Clear deadline on the invoice

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

Relationship to late payment interest

No due date, no arrears. No arrears, no late payment interest. The payment term is therefore the basic prerequisite for late payment interest. Anyone who does not clarify the term effectively waives the right to interest.

Typical terms in the Swiss market

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

If a client requests an installment payment agreement, agree on the installments and due dates in writing. Only when an installment is not received on time does the late payment interest begin for that installment.

What applies to discount and rebate?

A discount (Skonto, a payment deduction for fast payment) and late payment interest are not mutually exclusive, but they are two sides of the same coin. A discount is the incentive for on-time payment, late payment interest is the consequence for late payment. Practical: offer 2% discount for payment within 10 days, and charge 5% late payment interest from day 31. This makes the invoice attractive and provides discipline.

Late payment interest — deductible for tax purposes or not?

For creditors (you receive interest)

Late payment interest you receive is taxable income. As a self-employed person or sole proprietorship (Einzelfirma), you report it on your tax return as "other revenue." For VAT purposes, it is not taxable (see above).

For debtors (you must pay interest)

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

Important exception: late payment interest on tax and VAT debts

Late payment interest that you owe to the ESTV (Swiss Federal Tax Administration) or the tax authorities for late tax payments is not deductible. This is regulated in Art. 33 DBG (Federal Tax Law): sanctions and late payment interest on tax debts may not be deducted as a business expense. The same applies to late payment interest on MWST debts — the ESTV considers this a tax-related ancillary payment, not a business expense.

How do you book late payment interest correctly?

• Received late payment interest: Account 3700 "other revenue" (neutral, without VAT)
• Paid late payment interest: Account 6900 "financial expenses" — debt interest
• Late payment interest on tax debts: Private booking, not deductible

Anyone working with accounting software can have these accounts assigned automatically. Manually, check at year-end whether all late payment interest items are correctly classified.

Late payment interest in practice — template for your invoice and reminder

Here's how to show the late payment interest on the reminder in a legally secure way. Copy the text block and adapt the placeholders.

Text block: late payment interest on the reminder

Late payment interest pursuant to OR Art. 104 We charge late payment interest of 5% p.a. from the due date pursuant to OR Art. 104 (Swiss Code of Obligations). 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 claim + late payment interest by date.

Example 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 arrears: 36

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

Total claim: CHF 3,517.26

When is late payment interest worth it?

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

Setting late payment interest in the terms and conditions

Anyone who regularly deals with late payers in B2B should increase the late payment interest contractually in the terms and conditions. A typical clause:

"In case of late payment, we charge late payment interest of 8% p.a. from the due date, but at least the statutory late payment interest pursuant to OR Art. 104."

This gives you a legally secure higher interest rate and you don't have to negotiate each invoice individually. In B2C, the clause only applies with the statutory rate of 5%.

Next steps if the client doesn't pay

1. Check the due date — is there a date on the invoice?
2. Send a reminder showing late payment interest (text block above)
3. After the reminder deadline expires: initiate debt collection
4. If necessary: involve a lawyer or conciliation authority

Anyone who checks the pricing of Magic Heidi in advance knows: the software costs between CHF 25.00 and CHF 39.00 per month — significantly less than bexio at CHF 52.00 per month. A cheaper alternative to bexio is worthwhile if you want to automate invoices, reminders, and late payment interest.