Swiss accounting standards and Swiss GAAP FER: a guide for company directors

Swiss accounting standards: from the CO to recognised frameworks

Swiss accounting standards work on two levels. Every company keeps its statutory accounts under the Code of Obligations (art. 957 to 963b CO); some companies then add a second layer — a recognised financial reporting standard — that presents the same figures with far more transparency.

The CO fixes the foundations: who must keep books, what the annual financial statements contain (a balance sheet, an income statement and notes, art. 958 CO) and how long records are kept — ten years, under art. 958f CO. Below CHF 500,000 in annual revenue, sole proprietors and partnerships may keep simplified accounts; any SA/AG or Sàrl/GmbH keeps full double-entry books from day one.

This guide covers the reporting standards themselves. The underlying mechanics are treated separately: how transactions are classified in the Swiss chart of accounts and how assets and liabilities are presented in the Swiss balance sheet. For the full compliance calendar and audit rules, see our guide to accounting in Switzerland.

Above the CO minimum, Swiss law recognises five financial reporting standards, designated by the Federal Council in the Ordinance on Recognised Financial Reporting Standards: Swiss GAAP FER, IFRS, IFRS for SMEs, US GAAP and IPSAS (for public-sector bodies). A company adopts one of them either because the law requires it, or because its stakeholders want a clearer picture than the prudent CO accounts provide.

What is Swiss GAAP FER (Swiss GAAP RPC)?

Swiss GAAP FER (Fachempfehlungen zur Rechnungslegung, or Swiss GAAP RPC in French) is the Swiss national accounting framework. It delivers a true and fair view of a company’s financial position, cash flows and results, without the volume and complexity of IFRS.

It is maintained by the Swiss GAAP FER Foundation and has become the reference standard for Swiss SMEs, non-profit organisations and pension funds that want credible accounts for banks and investors, but do not report to international capital markets. It is also the domestic reporting standard accepted for companies listed on the SIX Swiss Exchange.

The essential difference with the statutory CO accounts is transparency: Swiss GAAP FER eliminates arbitrary hidden reserves and shows the real economic position, where the Code of Obligations allows a company to stay deliberately prudent. That single feature is why a lender or an incoming investor so often asks for FER accounts.

The Swiss GAAP FER modular structure: Core FER, FER 30, 31, 21 and 26

Swiss GAAP FER is modular. A company applies only the standards relevant to its size and activity, which keeps the framework proportionate — a decisive advantage over the all-or-nothing logic of IFRS.

Core FER for smaller organisations

The base layer is the Core FER: the conceptual framework plus FER 1 to 6 (basics, valuation, presentation and format, cash flow statement, off-balance-sheet transactions and notes). A smaller organisation that does not exceed two of these three thresholds in two consecutive years may limit itself to the Core FER:

• balance sheet total of CHF 10 million;
• annual revenue of CHF 20 million;
• 50 full-time employees on annual average.

Above those thresholds, an organisation applies the Core FER together with the further thematic standards. Compliance with the Core FER alone already produces a true and fair view.

The thematic and specialised standards

On top of the core sit standards that address specific questions — intangible assets, leases, long-term contracts, provisions (FER 23) or pension benefit obligations (FER 16). Four are worth singling out because they define who applies what:

• Swiss GAAP FER 30 — consolidated financial statements, the standard a group applies to its group accounts;
• Swiss GAAP FER 31 — the complementary standard for companies listed on the SIX Swiss Exchange;
• Swiss GAAP FER 21 — accounting for charitable, social non-profit organisations;
• Swiss GAAP FER 26 — accounting of pension plans, i.e. the pension institution’s own accounts, distinct from the employer’s obligation under FER 16.

CO vs Swiss GAAP FER vs IFRS vs US GAAP

The four frameworks answer different questions. The Code of Obligations protects creditors and sets the tax base; Swiss GAAP FER gives a true and fair view for Swiss stakeholders; IFRS and US GAAP serve international capital markets. The table below compares them on the criteria that actually drive the choice — the Swiss GAAP vs IFRS and Swiss GAAP vs US GAAP questions in one view.

In practice, most Swiss SMEs stay on the CO. A company moves to Swiss GAAP FER when a bank covenant, an investor or its own board wants accounts free of hidden reserves; it moves to IFRS or US GAAP when a foreign parent consolidates the group or when it lists on an international market.

Who must apply a recognised accounting standard?

Most companies are free to stay on the Code of Obligations. A recognised standard becomes mandatory only for defined categories, and a qualified minority of shareholders can force the question. Article 962 CO sets the rule.

Under art. 962 CO, a recognised financial reporting standard is compulsory, in addition to the CO accounts, for:

• companies whose equity securities are listed on a stock exchange, where the exchange requires it;
• cooperatives with at least 2,000 members;
• foundations that are legally required to undergo an ordinary audit.

Even outside these categories, a company must produce recognised-standard accounts if shareholders representing at least 20% of the share capital demand it — or 10% of a cooperative’s members, 20% of an association’s members, or any member subject to personal liability. Article 962a CO then requires the chosen standard to be applied in full and consistently.

Ordinary-audit thresholds and reinforced obligations

Recognised standards sit alongside the audit regime. A company must undergo an ordinary audit — and faces the heaviest reporting obligations, including consolidated accounts under a recognised standard (art. 963b CO) — once it exceeds two of these three thresholds in two consecutive years:

• a balance sheet total above CHF 20 million;
• revenue above CHF 40 million;
• more than 250 full-time employees on annual average.

Below that, an SME keeps its statutory CO accounts and a limited audit; the detail of each regime is set out in our guide to audit requirements. Any company outside the mandatory categories may still adopt Swiss GAAP FER voluntarily — and many do, precisely to satisfy a bank or an investor before being asked.

Hidden reserves, tax and the cost of switching to FER

Switching to Swiss GAAP FER changes how your accounts look, not how much tax you pay. Swiss taxable profit is derived from the statutory CO accounts, so the recognised-standard statements sit on top without inflating the tax bill. The real work — and cost — is in the transition.

Hidden reserves under the Code of Obligations

The Code of Obligations follows the prudence principle. It lets a company undervalue assets and retain provisions beyond strict need — the hidden reserves permitted by art. 960a para 4 and art. 960e CO. These reserves smooth results and reduce taxable profit, which is why Swiss statutory accounts rarely show the full economic picture.

What changes under Swiss GAAP FER

Swiss GAAP FER eliminates arbitrary hidden reserves. Assets are carried at values that reflect economic reality, provisions are recognised only when justified, and goodwill is either capitalised and amortised or offset against equity with disclosure. First-time adoption therefore means restating the opening balance sheet, releasing hidden reserves into equity and documenting each change — a project, not a formatting exercise.

Take a provision built up over years for a risk that never materialised. Under the CO it can sit quietly on the balance sheet; under Swiss GAAP FER it must be released, which lifts reported equity and can reassure a lender — even though the tax position, anchored in the CO accounts, is unaffected. This is the key point for directors: because the tax base rests on the commercial CO accounts (the authoritative principle), adopting FER or IFRS improves transparency without automatically increasing tax.

As a corporate services provider serving clients from more than 20 countries, My Swiss Company combines bookkeeping, year-end closing and the choice of reporting standard within our administration services for Swiss companies, with real-time access to your accounts through an online ERP platform.