In July 202*, Mr. X. acquired the company Z. Sàrl at an auction as part of the personal bankruptcy of Mrs. Y. Following numerous reminders from suppliers, he later realized the company's overindebtedness.
He attempted to save the company, notably by trying to obtain a COVID-19 loan, which was denied.
Mr. X. sent two registered letters to the former manager, Mrs. Y., requesting information about the fate of the balance sheet assets to reconstruct the missing information, but she did not respond.
Subsequently, Mr. X. failed to maintain accounting records for his company for the year 2021 and did not complete and send the financial statements and other necessary documents to the cantonal tax administration. According to Art. 957 para. 1 item 1 CO, partnerships with a turnover exceeding CHF 500,000 in the last financial year must keep accounts and present financial statements in accordance with standards. Partnerships with a turnover of less than CHF 500,000 in the last financial year are only required to keep a record of receipts and expenses as well as assets (Art. 957 para. 2 item 1 CO).
Regarding VAT, anyone operating a business, even non-profit, regardless of the legal form and the purpose pursued, and providing services within Swiss territory or having its headquarters, residence, or a permanent establishment in Switzerland, is subject to tax (Art. 10 para. 1 letters a and b LTVA). To be subject to VAT, the business must also achieve an annual turnover of at least CHF 100,000 in Switzerland and abroad (Art. 10 para. 2 letter a LTVA).
In this case, Mr. X.'s company has an annual turnover of less than CHF 500,000 and CHF 100,000. Therefore, only a record of receipts and expenses as well as assets needs to be kept, and the company is exempt from VAT.
On February 9, 202*, Mr. X. submitted a notice of overindebtedness to the judge of the Court of First Instance in B. because the company's assets no longer covered its debts.
According to Art. 725 para. 2 CO, if there are serious reasons to believe that the company is overindebted, an interim balance sheet is drawn up and submitted for verification by a certified auditor. If this balance sheet shows that the company's debts are not covered either when the assets are valued at their operating value or at their liquidation value, the board of directors must inform the judge, unless creditors accept that their claims be placed in a lower rank than all other claims of the company to the extent of the asset shortfall.
On June 13, 202*, the bankruptcy of the company was declared by the Court of First Instance of canton A.
From a criminal perspective, according to Art. 166 of the Swiss Penal Code, a debtor who has contravened the legal obligation to regularly maintain or retain their accounting books or to prepare a balance sheet, making it impossible to determine their situation or to determine it completely, will, if declared bankrupt, be punished with a custodial sentence of up to three years or a monetary penalty.
In this case, Mr. X. has failed to keep accounting records of the company's expenses, receipts, and assets for the year 202*. Moreover, the company was declared bankrupt on June 13, 202*. He is therefore exposed to a custodial sentence of up to three years or a monetary penalty.
Failure to maintain accounting records when required can have serious consequences for the company in the event of a tax audit. Indeed, the company risks a fine under Art. 174 and following of the Swiss Federal Tax Law.
The management report containing the annual financial statements must be prepared and submitted within six months following the end of the financial year to the body or persons competent to approve it, namely the president of the higher management or administrative body and the person responsible for preparing the financial statements within the company (Art. 958 para. 2 and 3 CO).
Mr. X. must therefore update his company's accounting records as soon as possible with the help of an accountant. Otherwise, he risks criminal proceedings and fines.
Our goal is to restore a legally compliant situation while proving that our client did not act unlawfully according to the law. We have the necessary expertise to prepare the company's accounts retrospectively to resolve Mr. X.'s situation.
If you require further legal information on this matter, please do not hesitate to contact the Valentin Legal Consultation. We would be pleased to welcome you to our offices for advice or to use our online services. We are also available by phone at 021 351 30 00 or by email at info@cjdv.ch.
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