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Old 19.09.2013, 10:13
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(Not) charging VAT when selling online

Someone here must've been through this before.

I am setting an online shop to sell virtual goods (software). From what I've been told by our accounting firm, we must collect names and physical addresses of all customers in order to be able NOT to pay VAT for non-Swiss customers. This is clearly unacceptable.

When I tried explaining that we can capture the network address of each customer and reliably restore their country of origin from it, it seemed to have fell on deaf ears.

So right now I am looking at the choice between losing a bunch of sales to the obnoxiously intrusive order form -or- paying VAT on all sales.

Is there a third option?
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Old 19.09.2013, 10:19
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Re: (Not) charging VAT when selling online

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Someone here must've been through this before.

I am setting an online shop to sell virtual goods (software). From what I've been told by our accounting firm, we must collect names and physical addresses of all customers in order to be able NOT to pay VAT for non-Swiss customers. This is clearly unacceptable.

When I tried explaining that we can capture the network address of each customer and reliably restore their country of origin from it, it seemed to have fell on deaf ears.

So right now I am looking at the choice between losing a bunch of sales to the obnoxiously intrusive order form -or- paying VAT on all sales.

Is there a third option?
Well you won't be paying VAT on sales but your customers will.

Why not just let all customers know that unless they confirm that they are outside of CH, and give a valid address to boot, you will have to charge VAT, after all it is the law. You then put that address on the invoice and the sale can be VAT exempt.
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Old 19.09.2013, 10:39
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Re: (Not) charging VAT when selling online

Haha, no. You are effectively trying to convince me to force our customers to enter their address in exchange for not charging them extra. Excellent strategy. Imagine yourself being gouged that way when you are trying to buy something off, say, Japanese website and then tell me if you are going to complete the sale.
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Old 19.09.2013, 10:41
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Re: (Not) charging VAT when selling online

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Haha, no. You are effectively trying to convince me to force our customers to enter their address in exchange for not charging them extra. Excellent strategy. Imagine yourself being gouged that way when you are trying to buy something off, say, Japanese website and then tell me if you are going to complete the sale.
Ummm, that's pretty much what happens everytime I order something on-line...

I'm not quite sure what you are getting your knickers in a twist for.
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Old 19.09.2013, 10:47
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Re: (Not) charging VAT when selling online

If they don't give their address, how will you or you e-commerce software know they are not in Switzerland in order not to charge VAT?

(Assuming your software cannot detect this from IP addresses...)
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Old 19.09.2013, 10:51
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Re: (Not) charging VAT when selling online

Oh, and I'm not surprised they don't rely on IP addresses, AFAIK these can be masked anyway.

The burden of proof for VAT exemption is on the person who wants to be exempt. Not on the tax authorities.
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Old 19.09.2013, 10:54
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Re: (Not) charging VAT when selling online

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I'm not quite sure what you are getting your knickers in a twist for.
For simpler checkout experience.

Every extra field on the order form costs sales. Asking for sensitive personal information that is irrelevant to the sale at hand (to the customer) costs even more.

If I am buying a piece of downloadable software, there's really no reason for me to provide my street address. However this is what FTA appears to be requiring.
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Old 19.09.2013, 10:59
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Re: (Not) charging VAT when selling online

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If they don't give their address, how will you or you e-commerce software know they are not in Switzerland in order not to charge VAT?

(Assuming your software cannot detect this from IP addresses...)
Geolocation is reliable. I'm a network computer programmer by trade, I know this stuff well. There are marginal cases when the IP comes from a block that has no country information, but these are really rare and these can be assumed to be Swiss for VAT purposes.

There are also cases when a Swiss person surfs via a proxy or a VPN that makes it look as if he's outside of Switzerland. With auto-detection he won't be charged VAT. But then, if this person surfs that way, the chances are that he wouldn't give an accurate physical address either.

It's really a no-brainer.
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Old 19.09.2013, 11:01
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Re: (Not) charging VAT when selling online

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For simpler checkout experience.

Every extra field on the order form costs sales. Asking for sensitive personal information that is irrelevant to the sale at hand (to the customer) costs even more.

If I am buying a piece of downloadable software, there's really no reason for me to provide my street address. However this is what FTA appears to be requiring.
Let me put it simply so that you can better understand: you are wrong. If you want to be VAT exempt there is really every reason to provide your address.

If it is really bugging you, why don't you put in a tick box for people who want to be VAT exempt, and this allows them to put their address in? Those who want/don't mind paying VAT don't have to give their IRL addresses.

There, HTH.
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Old 19.09.2013, 11:04
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Re: (Not) charging VAT when selling online

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Haha, no. You are effectively trying to convince me to force our customers to enter their address in exchange for not charging them extra. Excellent strategy. Imagine yourself being gouged that way when you are trying to buy something off, say, Japanese website and then tell me if you are going to complete the sale.
I don't see what the problem is. Anytime I order something online I'm always asked to give an address..... you just need one text box for street and city and a pull down menu for country.

If I want to buy something, then being asked to give that info to save me 8% VAT is not going to stop me buying, if anything, I'm more likely to want to give that info!
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Old 19.09.2013, 11:08
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Re: (Not) charging VAT when selling online

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There, HTH.
No, it didn't H. You are just rehashing obvious facts. This is not helpful.

Let me put it simply so that you can better understand - an average person coming to a .com website don't give a damn if it's in Switzerland. Nor will he be generally aware of the existence of VAT. If it says $9.99 on the page and then it just happens that it's actually more *unless he gives away his precious personal info*, he feels cheated. I need to understand how to work around that.
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Old 19.09.2013, 11:11
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Re: (Not) charging VAT when selling online

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No, it didn't H. You are just rehashing obvious facts. This is not helpful.

Let me put it simply so that you can better understand - an average person coming to a .com website don't give a damn if it's in Switzerland. Nor will he be generally aware of the existence of VAT. If it says $9.99 on the page and then it just happens that it's actually more *unless he gives away his precious personal info*, he feels cheated. I need to understand how to work around that.
So, since everybody but you is wrong anyway... how do you intend to charge your customers..?
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Old 19.09.2013, 11:11
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Re: (Not) charging VAT when selling online

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No, it didn't H. You are just rehashing obvious facts. This is not helpful.

Let me put it simply so that you can better understand - an average person coming to a .com website don't give a damn if it's in Switzerland. Nor will he be generally aware of the existence of VAT. If it says $9.99 on the page and then it just happens that it's actually more *unless he gives away his precious personal info*, he feels cheated. I need to understand how to work around that.
*sigh*

Good luck to you then.
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Old 19.09.2013, 11:16
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Re: (Not) charging VAT when selling online

Everybody knows that tax is due on purchases, no? Here, there or anywhere- and that if they don't want to pay VAT, they have the burden of proof. Why set up an internet business here in CH, if you don't want to follow the rules and the majority of your customers won't understand?
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Old 19.09.2013, 11:22
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Re: (Not) charging VAT when selling online

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Everybody knows that tax is due on purchases, no? Here, there or anywhere- and that if they don't want to pay VAT, they have the burden of proof. Why set up an internet business here in CH, if you don't want to follow the rules and the majority of your customers won't understand?
Point being is that it's very easy to collect said proof automatically and without making it a burden. I am asking if anyone had any experience with that in the framework of Swiss taxation laws.

I'm not questioning if the VAT should be collected.
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Old 19.09.2013, 11:23
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Re: (Not) charging VAT when selling online

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Everybody knows that tax is due on purchases, no? Here, there or anywhere- and that if they don't want to pay VAT, they have the burden of proof. Why set up an internet business here in CH, if you don't want to follow the rules and the majority of your customers won't understand?
No, no, no, Odile! He wants to know how to avoid this. Stop rehashing obvious facts!
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Old 19.09.2013, 12:01
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Re: (Not) charging VAT when selling online

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we must collect names and physical addresses of all customers in order to be able NOT to pay VAT for non-Swiss customers. This is clearly unacceptable.
For what reason is this unacceptable?

Every (legal) business that I know of operates this way.

Tom
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Old 19.09.2013, 12:04
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Re: (Not) charging VAT when selling online

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If it says $9.99 on the page and then it just happens that it's actually more *unless he gives away his precious personal info*, he feels cheated. I need to understand how to work around that.
Include VAT in the price, as is normally the case here and in the EU.

Also, Swiss VAT is low compared to the EU, so most people would rather pay Swiss VAT than their own.

Tom
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Old 19.09.2013, 13:15
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Re: (Not) charging VAT when selling online

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Include VAT in the price, as is normally the case here and in the EU.
That's the plan B. Realistically though I won't get many (any?) Swiss sales, so giving away 8% on every transaction is rather unreasonable.
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Old 19.09.2013, 13:30
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Re: (Not) charging VAT when selling online

This all assumes that you have a turnover above CHF100,000 and need to charge VAT at all. Do the have VAT in Canada, by the way?
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