Swiss Freelancer Guide

Credit Notes for Swiss Freelancers: When and How to Issue Them Correctly

You've sent an invoice with the wrong amount. Or a client cancelled a project after you billed them. The professional solution? Issue a credit note. Learn exactly when you need them and what Swiss law requires.

What Is a Credit Note?

A credit note is a document that reduces or cancels the amount a client owes you. Think of it as a "negative invoice" that corrects billing errors, handles refunds, or adjusts previously issued invoices.

In Switzerland, credit notes serve a crucial legal purpose: they create an audit trail. You cannot simply delete or modify an invoice once it's been issued. Instead, you issue a credit note to reverse or adjust it.

This matters for three reasons:

Legal compliance - Swiss law requires maintaining complete financial records for 10 years
VAT accuracy - Credit notes affect your MWST/TVA returns and must be documented properly
Professional credibility - They show clients you handle corrections transparently

For freelancers and sole proprietors (Einzelfirma), understanding credit notes isn't optional. It's essential for staying compliant and maintaining good client relationships.

Understanding the Terms

Important: Swiss Credit Note Terminology

The German term 'Gutschrift' is commonly used for credit notes, but it actually has different meanings depending on context. This creates confusion, especially in German-speaking Switzerland.

Korrekturrechnung

Invoice correction - what most freelancers need. You issue it to correct or cancel your own invoice.

Abrechnungsgutschrift

Settlement credit note - a less common arrangement where the client issues the 'invoice' to you instead.

Anzahlungsgutschrift

Advance payment credit - documents deposits that will be offset against future invoices.

For clarity in this guide: When we say "credit note," we mean a Korrekturrechnung—the document you issue to correct or cancel your own invoices.

When to Use Credit Notes

When Should You Issue a Credit Note?

Credit notes aren't for every situation. Here's when you actually need one:

Invoice Errors (Most Common)

You sent an invoice with mistakes: wrong hourly rate or project fee, incorrect VAT rate (8.1% standard rate, not 2.6% reduced rate), math errors, duplicate invoices, or wrong client information.

Issue a credit note for the full amount
Then send a corrected invoice
Keep both documents in your records
Update your accounting system

Project Cancellations

The client cancels after you've already invoiced them. The credit note amount depends on project progress.

Before starting: full credit note
After partial completion: credit undelivered portion
After full payment: credit note + refund
Document cancellation agreement

Service Issues or Disputes

When delivered work doesn't meet expectations or you want to maintain client relationships.

Client dissatisfaction with deliverables
Couldn't complete agreed services
Quality issues warranting discount
Goodwill gestures for retention

What You Can't Do: Just Delete the Invoice

Under Swiss law (Code of Obligations), you must maintain complete financial records for 10 years. Deleting invoices violates legal requirements, creates gaps in sequential numbering, causes audit problems, and impacts VAT reporting accuracy.

What Must Be Included in a Swiss Credit Note

To be legally valid and VAT-compliant, your credit note needs specific information.

Required Elements

Your business details:

Business name (as registered)
Full address
Contact information
UID number (if VAT-registered)

Credit note identification:

Unique credit note number (separate sequence from invoices)
Issue date
Clear label "Gutschrift" or "Korrekturrechnung"

Link to original invoice:

Original invoice number
Original invoice date
This connection is legally required

Client information:

Client's business/personal name
Full address
UID number (if applicable)

Description of correction:

Clear reason for the credit note
Itemized breakdown of credited amounts
Original amounts being reversed

Financial details:

Line items with negative amounts (or clearly marked as credits)
Applicable VAT rates (8.1%, 2.6%, or 3.8%)
VAT amount being reversed
Total credit amount

Payment terms (if applicable):

How the credit will be applied
Refund method if already paid
Offset against future invoices

Current Swiss VAT Rates (2024-2025)

Make sure you use the correct rates:

Standard rate: 8.1% (most services)
Reduced rate: 2.6% (books, newspapers, some food items)
Special rate: 3.8% (accommodation services)

The example in many older guides shows 7.7%—that rate ended in 2024.

Step-by-Step: Creating a Credit Note

Follow this systematic approach to generate proper credit notes for your freelance business. Each step ensures compliance with Swiss regulations and maintains professional standards.

📋

Gather Original Details

Pull up invoice number, date, amounts, and VAT information

🧮

Determine Credit Amount

Calculate full credit, partial credit, or adjustment amount

📝

Create the Document

Use Swiss invoicing software or proper template format

💾

Update Your Records

Record in accounting system and adjust VAT figures

📧

Send to Client

Email with clear explanation and next steps

💳

Process Refund

Handle payment within 7-14 days if already paid

Credit Note Example (Swiss Format)

Here's what a properly formatted credit note looks like for a Swiss freelancer:

─────────────────────────────────────────────────────
ANNA MÜLLER DESIGN
Bahnhofstrasse 45, 8001 Zürich
anna@muellerdesign.ch | +41 44 123 45 67
UID: CHE-123.456.789 MWST
─────────────────────────────────────────────────────

GUTSCHRIFT / CREDIT NOTE

Credit Note No: CN-2024-003
Date: 15. November 2024

Original Invoice: INV-2024-147
Invoice Date: 1. November 2024

Client:
TechStart GmbH
Seestrasse 88
8002 Zürich
UID: CHE-987.654.321 MWST

─────────────────────────────────────────────────────
Reason: Project cancellation - mutual agreement

Description                          Amount (CHF)
─────────────────────────────────────────────────────
Website Design Phase 1                  -2,500.00
Brand Identity Concepts                 -1,200.00
                                    ──────────────
Subtotal                                -3,700.00
VAT 8.1%                                  -299.70
                                    ──────────────
TOTAL CREDIT                            -3,999.70
─────────────────────────────────────────────────────

Credit Applied: This amount will be refunded to your 
original payment method within 5 business days.

Thank you for your understanding.
─────────────────────────────────────────────────────

Tax Compliance

How Credit Notes Affect Your VAT Returns

Credit notes have direct tax implications. When you issue one, your reported revenue decreases, your VAT liability decreases, and you must document this in your next VAT return through the SuisseTax portal.

Reporting to the Federal Tax Administration

Switzerland requires VAT-registered businesses to file returns electronically through the SuisseTax portal.

How to report credit notes:

For quarterly returns (most common for freelancers):

Include credit notes issued during the reporting period
They reduce your total turnover (Umsatz/chiffre d'affaires)
Adjust the corresponding VAT amount owed
Keep credit note documentation for 10 years

Timeline: VAT returns must be submitted within 60 days after the end of each quarter.

Example VAT Adjustment

Scenario: You issued an invoice for CHF 5,000 + CHF 405 VAT (8.1%) in Q3. In Q4, you issue a full credit note.

Q3 VAT Return:

Turnover: CHF 5,000
VAT owed: CHF 405

Q4 VAT Return:

Turnover adjustment: -CHF 5,000
VAT adjustment: -CHF 405
Net effect: Reduces Q4 liability or increases refund owed

Common Pitfalls

Common Mistakes to Avoid

Even experienced freelancers make these errors with credit notes.

Using Positive Amounts

Show amounts as negative (e.g., -CHF 1,000.00) or clearly marked as credits, not positive like regular invoices.

Wrong VAT Rate

Always verify current rates—8.1% standard as of 2024. Don't use outdated 7.7% from old templates.

Missing Invoice Reference

Always include original invoice number and date. The link is legally required in Switzerland.

Poor Numbering System

Maintain separate sequential numbering (CN-001, CN-002, etc.). Don't reuse invoice numbers.

Delaying Too Long

Issue credit notes promptly when errors are discovered. Delays complicate VAT returns across periods.

Insufficient Documentation

Always document why you're issuing it. Helps during audits and prevents disputes.

Best Practices

Tips for Managing Credit Notes Effectively

Smart credit note management prevents headaches down the road.

Establish Clear Policies

Define your approach before issues arise

Set clear expectations with clients about refunds, cancellations, and error corrections.

Refund timeline: How quickly you process refunds
Cancellation terms: Percentage refunded by project stage
Error corrections: Your process for fixing billing mistakes
Communication protocol: How you handle credit note discussions

Document Everything

Create a paper trail for every credit note

This protects you during disputes and tax audits.

Save email correspondence about the issue
Note phone conversations in your CRM or project notes
Keep records of client agreement to adjustments
Document internal decision-making process

FAQ

Frequently Asked Questions

Can I issue a credit note months after the original invoice?

Yes, but it complicates your accounting. The credit note affects the period when issued, not when the original invoice was created. For invoices from prior tax years, consult an accountant about proper treatment.

Do I need separate numbering for credit notes and invoices?

Yes, it's best practice. Use a distinct numbering sequence (e.g., CN-001, CN-002) separate from your invoice numbers (INV-001, INV-002). This prevents confusion and maintains clear audit trails.

What if the client disputes the credit note?

Document your reasoning clearly. If it's for an error, show your calculations. If it's for dissatisfaction, refer to contract terms. Most disputes arise from poor communication—explain clearly why you're issuing it and how it will be applied.

Can I issue a partial credit note?

Absolutely. You don't need to credit the entire invoice. Issue a partial credit note for specific line items or amounts, clearly documenting what you're crediting and why.

How do credit notes work with QR-invoices?

If you use QR-invoices (mandatory in Switzerland since 2020 for payments over certain amounts), your credit note can also include a QR code for refund processing. Most Swiss invoicing software handles this automatically.

What happens if I've already filed my VAT return?

If you discover an error after filing, issue the credit note and include the adjustment in your next return. For significant amounts, contact the Federal Tax Administration about amending the previous return.

Can I offset a credit note against a future invoice?

Yes, if both you and the client agree. Document this clearly: 'Credit note CN-001 (CHF 500) will be applied to Invoice INV-150, reducing the balance to CHF 2,500.'

Do I need to issue credit notes for bad debt?

No. Bad debt (unpaid invoices you write off) is handled differently through your accounting system. Credit notes are for adjustments you initiate, not for documenting non-payment.

Streamline Your Swiss Invoicing

Magic Heidi is built specifically for Swiss freelancers, with automatic VAT calculations, QR-invoice support, and simple credit note creation. Handle billing corrections professionally while staying compliant with Swiss regulations.

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