What is the Swiss e-Commerce Tax?

22 August, 2018
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Switzerland has a population of more than 8 million and is a popular location for overseas e-Commerce businesses looking to establish relationships with new customers. Understanding the local rules and regulations is an important part of ensuring that e-Commerce trade with Switzerland is straightforward and smooth – getting to grips with the Swiss e-Commerce Tax is a fundamental part of that.

e-Commerce in Switzerland

The Swiss e-Commerce market is highly rated by overseas businesses because local consumers are very open and interested in buying from overseas brands. 61% of online purchases in Switzerland are made from foreign businesses, which makes Switzerland one of the top three markets in Europe when it comes to cross border buying. Local customers spend around €2,149 online annually and have some of the highest purchasing power in the world. The most popular e-Commerce category is clothing. In 2017, the total value of online sales in Switzerland was €7.4 billion and the size of the local e-Commerce market is forecast to grow significantly, by around 7.2% per year.

VAT and Custom Duties

Every item that arrives into Switzerland is subject to VAT and customs duties – and that includes goods that are ordered via overseas e-Commerce websites. These charges are separate to the amount that is charged for shipping and are paid by the consumer, not by the e-Commerce business. It’s important to take the potential charges into account when you’re pricing items for the Swiss market and to show these transparently, as Swiss consumers are not keen on what they consider to be hidden costs.

  • VAT. Items coming into the country from a foreign retailer are charged at the same rate as local purchases offline – 7.7%. This is one of the reasons why Switzerland is popular with overseas brands, as there is no punitive tax rate if goods are not being made or sold locally. A reduction in the rate of VAT is available where goods are considered to be basic essentials e.g. food. In that case, a rate of 2.5% will apply.
  • Customs duties. Other than Australia, Switzerland is the only country in the world that bases its customs duties on the weight of an item, as opposed to the value of what it is in the package. This applies to almost all items coming into the country, other than some which have specific restrictions and attract different duties. Duties are always charged in Swiss Francs and will vary depending on the item inside – for example, trainers have a duty rate of CHF206.00 per 100 kg but lightweight cotton clothing would be CHF171.00 per 100 kg.
  • The CHF minimum. Where the total of VAT and customs charges amounts to CHF 5 or less (per import), the Swiss Federal Customs Administration doesn’t collect. Purchasing items under this limit can make importing individual goods into Switzerland much cheaper for consumers. On the other hand, exceeding this limit unexpectedly can result in a very unpleasant customer experience.

It’s important to make sure you’re prepared before you begin targeting Swiss consumers with your e-Commerce business. Swiss e-Commerce Tax doesn’t have to be an issue, as long as you understand what’s involved.

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