Magic Heidi Swiss Default Interest: Claiming 5% | Magic Heidi
Swiss default interest: the 5% rate, when default begins, transparent CHF calculations, VAT distinctions and limitation periods.
Founder of Magic Heidi
For a monetary debt in default, statutory default interest is generally 5% a year under Article 104 of the Code of Obligations (CO). No proof of a specific loss is required. First establish when payment became due and when default began.
When does default begin?
Article 102 CO distinguishes:
- The general rule: A reminder puts the debtor in default once payment is due. Receipt matters, not merely a record of sending.
- An agreed fixed deadline: Default can begin when that day expires without another reminder. A date clearly calculable from the agreement may also be relevant.
A unilateral invoice term such as “payable in 30 days” is not automatically an agreed contractual deadline. Agree payment conditions in the contract or accepted quotation. The same basic distinction applies to private and business customers, subject to special rules. See payment terms.
A friendly reminder can already constitute a legal demand if it clearly requests the due payment. It does not require a fee or threat of enforcement.
Calculating default interest
The following illustrative calculations use actual days in default and a 365-day year. This day-count convention is a disclosed assumption, not a divisor expressly prescribed by Article 104 CO. Check different agreements and the calculation applicable in the actual proceedings.
Interest = outstanding principal × annual rate × days in default / 365
Use the actual principal owed, generally including VAT for an ordinary unpaid invoice. No VAT is added to the default interest itself. Deduct partial payments and split the interest calculation into the appropriate periods.
| Outstanding principal | Days in default | Interest at 5% |
|---|---|---|
| CHF 850.00 | 30 | CHF 3.49 |
| CHF 4,800.00 | 45 | CHF 29.59 |
| CHF 6,200.00 | 60 | CHF 50.96 |
| CHF 12,500.00 | 90 | CHF 154.11 |
| CHF 25,000.00 | 180 | CHF 616.44 |
Round the result to centimes and document the start and end of the period used.
Entirely fictional calculation: CHF 4,800.00 at 5% for 45 days in default produces CHF 29.59 interest. That cannot predict whether the customer will pay or dispute the claim.
No VAT on default interest; reminder charges are separate
Default interest under Article 104 CO is treated as compensation for loss, not consideration for your supply (Article 18 paragraph 2 letter i of the VAT Act). Do not charge VAT on it.
Under FTA practice, reminder charges relating to the supply instead form part of the consideration and follow its tax treatment. That does not always mean 8.1%: check the principal supply, VAT registration and applicable rate. Tax classification does not establish a right to the fee; see reminder fees.
A template for a justified interest claim
This assumes the start and duration of default are established. Replace the placeholders and state the basis, such as the agreed deadline or receipt of an earlier demand.
Payment demand — invoice [number]
Dear [Name]
Invoice [number, date] is due and remains unpaid.
Start of default: [date and basis]
Calculation period to [cut-off date]: 45 days in default
Day-count basis: actual days / 365
Outstanding principal: CHF 4,800.00
Default interest at 5% p.a.: CHF 29.59
Total at the cut-off date: CHF 4,829.59
No VAT on the default interest.
Please pay by [date]. Further justified interest after
this cut-off will be calculated separately until payment.
Please contact us with questions or evidence of payment.
Kind regards
[Name / business]
The template deliberately avoids an inconsistent combination of calendar dates and “45 days”. Count your actual days using the applicable convention and evidenced start of default.
More than 5%: interest and additional loss
Article 104 paragraph 2 concerns higher contractual interest; paragraph 3 contains a special rule for a higher customary bank discount rate between merchants. Do not apply these exceptions indiscriminately to every invoice.
Under Article 106 CO, loss beyond default interest may be recoverable. You must substantiate the additional loss and other requirements; the debtor can prove absence of fault. A prior fee agreement is not the only possible basis for a claim. Equally, a flat collection-agency bill is not proof of recoverable loss. Avoid compensating the same disadvantage twice.
Under Article 105 paragraph 3, default interest cannot itself bear default interest. Paragraph 1's special rule for overdue capital interest is not a general licence to compound your default-interest claim.
Enforcement, certificates of loss and limitation
State principal, interest rate and interest start date clearly in an enforcement request. An objection stops enforcement, not automatically every interest claim. See initiating debt enforcement.
For a claim recorded in a seizure certificate of loss, the debtor no longer owes interest (Article 149 paragraph 4 SchKG). Bankruptcy certificates involve further rules. Do not treat every procedural conclusion alike.
A reminder does not interrupt limitation. Article 135 CO includes acknowledgement by the debtor and legal steps among the grounds for interruption. Interest is generally subject to the five-year period under Article 128 item 1; the principal may have a different period depending on the claim. Check the start, interruptions and dependence on the principal in the actual case; see invoice limitation periods.
If you owe the FTA money
The private-law CO default rate is not automatically the rate for federal taxes. VAT is governed in particular by Articles 86–87 of the VAT Act and rates reviewed annually. A late return alone does not establish the exact interest period: the tax due date, payment and actual accounting circumstances matter.
Use the FTA's current VAT payment information rather than importing the private-law rate. If cash is tight, you can propose a payment plan; applying guarantees neither approval nor exemption from interest.
Practical checklist
Record each invoice's due date, receipt of a reminder or agreed fixed deadline, partial payments and interest periods. Check every calculation before sending. This guide does not assume that Magic Heidi natively calculates interest or triggers reminders automatically.
Frequently asked questions
Does the date printed on my invoice automatically start interest?
Not necessarily. Distinguish an agreed fixed deadline from a unilateral invoice term. Otherwise a demand received after payment becomes due is generally needed.
Is interest calculated on the net invoice amount?
For an ordinary unpaid invoice, use the outstanding principal owed, generally including VAT. Do not charge VAT on the default interest itself.
Can reminders keep the claim alive indefinitely?
No. An ordinary reminder does not interrupt limitation. Assess the actual limitation period and legally effective interruption separately.
Sources
- Articles 102–106, 128 and 135 CO on Fedlex.
- VAT Act on Fedlex: Article 18 paragraph 2 letter i.
- FTA VAT practice publications: VAT Info 04, distinction between default interest and reminder charges.
General information, not individual legal or tax advice.