Switzerland is a leading international gateway for e-commerce trade. Situated at the core of continental Europe, the Swiss Confederation enjoys prominence in various manufacturing areas and can boast a business-friendly tax framework, very efficient postal/courier services and high IT-infrastructures. Unsurprisingly, many important retail brands have chosen the country as a hub to develop crossborder e-commerce sales.
Switzerland-based businesses that aim at expanding towards other territorial markets must implement trade flows fully meeting all international tax and legal requirements.
We have tried to set down a complete (but concise) checklist of the major tax, regulatory and legal aspects that e-commerce exporters should address:
1. EORI: First of all, in order to ship goods from Switzerland to consumers situated within the EU, all merchants shall apply for an EORI number: merchants not established in the EU should request the assignment of the EORI number in the EU country where they want to import consumer goods to. If the UK leaves the EU, a specific UK EORI number will be also required.
2. INVOICING: all parcels exiting Switzerland must be accompanied by a proper commercial invoice. The invoice should include the price and the commodity codes of all products, the amount of shipping and insurance expenses, if any, the incoterms and other mandatory info. The commercial invoice will be crucial for the customs officials to determine any customs/import duties in the country of destination. No outbound export duties will apply in Switzerland. Some couriers offer paperless invoicing services.
3. LOW VALUE EXEMPTIONS: sometimes countries apply small consignment exemptions, meaning that parcels with a value lower than a set amount will not be subject to import duties. The EU has a threshold of Eur 22 per parcels for VAT purposes (which will be repealed as of 1 January 2021) and of Eur 150 per parcel for customs duties purposes (which, on the contrary, will stay in place in 2021). The United States are more generous: most goods with a commercial value lower than USD 800 (without considering shipping and insurance expenses) are not subject to customs duties or sales taxe at the U.S. border.
4. FREE TRADE AGREEMENTS: Free Trade Agreements allow to export products with preferential origin to countries without the application of customs duties. In addition to the EFTA Convention and the Free Trade Agreement with the EU of 1972, Switzerland currently has a network of 30 FTAs with 40 partners. Switzerland has already executed a Free Trade Agreement with China, effective as of July 2014. This is a competitive advantage against all the other European countries, as the EU has not reached yet any agreement with China to remove trade barriers.
5. DETERMINING DUTIES: there various ways to try to pre-determine customs duties, where applicable. The EU market access database (https://madb.europa.eu/madb/) or commercial products (e.g, Pitney Bowes, etc.). The impact of customs duties is usually influenced by various factors on a case by case basis (e.g. commodity code, value, weight, etc.).
6. DDU vs. DDP: who pays for import duties? Under a duty delivery unpaid solution(DDU), the customer pays import duties directly to the postal company/courier at the moment of receiving the parcel; under a duty delivery paid scheme (DDP), instead, the merchant embeds the duties in the online price and has the customs broker/courier paying all duties on his behalf; the customer receives the cleared parcel at destination with no further action required; most luxury brand uses DDP to allow a smooth delivery process and make their customers more comfortable.
7. DUTY DRAWBACK: in general, it is quite difficult to claim to claim a refund of duties and certain fees paid at the moment of importing goods to the destination country. This is quite an issue because crossborder product returns are very frequent in e-commerce; a way to reduce the financial impact of returns is to avoid any reimportation of returned products by having local partners in the major markets (the EU, the US, China, Russia, etc). to gather and resell the products.
8. REGULATORY ASPECTS: many products (for instance: toys, textiles, sunglasses, etc.) may be subject to regulatory checks and trade restrictions in a specific country of destination. It is important to learn in advance which licenses, controls and authorizations are required to export a product before starting any international trade activities.
9. CCNSUMER RIGHTS: many global countries protect their own consumers with distance selling rights. In Europe, for instance, consumers have the statutory right to return products without giving any explanation within 14 days from the date of delivery and to receive a full price refund (at specific conditions). Furthermore, merchants targeting EU territories must publish exhaustive conditions of sales and to inform consumers of their rights.
This checklist does not purport to be exhaustive. it is only a starting point. There are other aspects to be considered when developing a strategy to increase sales internationally. Tailored tax and legal advice should always be relied on in these circumstances.
The first and only
Swiss Association of
Centro Galleria 1 A
6928 Manno CH
@ DAGORA TECH HUB
T. +41 (0) 91 210 47 36
VAT no.: CHE-485.124.256 IVA
T. +41 (0) 44 500 21 73
Blue Box, Chemin du Pré-Fleuri 3
1228 Plan-les-Ouates CH
T. +41 (0) 22 510 71 03
@ Fongit Foundation