Swiss E-commerce Taxation: How to handle VAT when selling products from Switzerland to Europe (B2C)
One of the hassles of small-medium sized Swiss ecommerce companies is how to handle VAT when selling and delivering products to customers in other European countries. In this scenario, the VAT of the recipient country (known as import VAT) will need to be paid before the products can be delivered to the customers.
How to pay the destination country’s VAT?
For B2C businesses, the simplest way to handle such VAT is to let the customers pay it directly. For example, you sell a product from your Swiss company to a customer is Germany for 100 EUR. Once it is sent to Germany, the German Post will charge German VAT of 19% to the customer before releasing the product. This means that the customer would pay 100 EUR for the product at your online shop and, again, pay another 19 EUR for VAT to German Post at the delivery.
What if I don’t want my client to pay twice?
Having to pay first for a product and, later, for VAT could cause an unpleasant buying experience. To solve this, an ecommerce company could use a Delivery Duty Paid (DDP) systems. With DDP, the VAT of the destination country can be added at point of sale. Using the previous example of selling a product at 100 EUR to a client in Germany, you can charge the client 119 EUR, which is the product price plus the VAT, and then pay the collected VAT to the destination country during the process of shipping. As the VAT has been paid, the product can be delivered to the client without having to pay additional fees.
How can I use the DDP system?
In order to use the DDP service, you will need to register for VAT in the destination country as Swiss VAT registration, being non-EU, is not sufficient. For some destination countries, such as Italy, France, Austria, a local fiscal representative is required for VAT registration.
Once the company is registered for VAT in an EU country, there’s generally no need to register in another EU countries when you have customers there. The process of VAT registrations, finding DDP services and other tax compliance and administration can be more convenient when it is well taken care by a specialist such as F Trust. F Trust can look into your business structure, give suggestions as well as take care of VAT matters and tax optimization for your company.
About F Trust
We are family office located in Zurich and Zug, Switzerland. We are specialists with over 10-year experience in company formation, administration, accounting, VAT registration and payroll services. If you would like F Trust’s assistance in VAT registration or business structuring, please get in touch at admin@ftrust.ch