Geoarbitraging, offshoring, taxes, morality

I’m not a lawyer, but if any of the subscription services would find out what you are doing, they would definitely find some way to sue you.

While thinking about it, are you not cheating the Swiss government for taxes as well, by buying the subscription in a foreign country?

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I do not know about the legal implications of doing geoarbitrage. I haven’t read the terms and conditions to be honest :wink:
But morally, I cannot support a company who charge people more for the same service just because we live in switzerland. It cannot even be argumented that they have higher labor costs in Switzerland (that would be the case for retail, restaurants, etc where I am happy to spend more btw).

Can you please elaborate? I cannot deduct my Netflix costs from taxes, so I do not see how I would be cheating the Swiss government…

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This could be said about many products and services. Almost every product (exact same product, produced at the same place) in Italy is cheaper than in Switzerland, even though the labor cost is sometimes higher (longer transportation).

You don’t pay taxes, but Netflix does and if they make less revenue in Switzerland, because you subscribe in another country, the pay less taxes to the swiss government.

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I think there is Swiss VAT included in a service like that when bought in Switzerland, but not when doing parallel digital import.

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I would argue the contrary: I think it’d be morally wrong to charge someone in a lower income country the same absolute number charged to someone living in a high income country.

But I am contributing to derailing the thread.

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Hmm. So many many many companies that sell physical goods are morally wrong then. I won’t start to compare iPhone prices here, but you get the point.

People do not understand that when I am connected to the internet, it does not matter where I am physically. I could write this post from a decaying mall in Thailand, from a smelly seat on a ferry in Greece or from a gay bar in Ireland.

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It’s immoral to charge ppl less than what they are ready to pay

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OK, I undestand better what you were implying, thanks. Unfortunately, I do not agree for the following reasons:

  1. For that to be true, the streaming service would need to make less revenue because I suscribed in Turkey. That is not the case since I would probably not have a streaming service account at the excessively high (at least for my usage) swiss price.
  2. I do not know how this specific streaming service pays its taxes, but I know that international corporates have very elegant schemes in order to concentrate their gains in countries with low taxes like Ireland, while at the same time having a zero gain (or even a small loss) in the other countries and therefore not paying any taxes.
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We are discussing this topic. What about transferring money abroad at IB in order to pay less fees rather than investing through a swiss broker?

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I totally agree with you. This is much more important than a couple of francs for a streaming service subscription.
With the right broker, we are speaking about thousands of francs which can be saved.

@mods @Julianek could we split off this discussion of “geolocation morality & taxes” in order to un-dilute the original subject, “swiss life hacks”?

thanks :slight_smile:

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You don’t pretend to be in another country. If IB charges much less than Swiss brokers for the same service, too bad for Swiss brokers.

And I would say you take some risk by investing not with a Swiss broker, so lower fees are justified.

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Yes but by doing this you are not paying stamps taxes and CH broker also pays less taxes due to lower income. Same as above with netflix earning less money in CH.

That’s not illegal to held your portfolio abroad. As long as you declare it in Switzerland and don’t lie to your broker about your residence.

That’s something else to lie on your domicile to get a cheaper subscription or share your account. It’s a violation of the terms and conditions.

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When I saw your comment I had to check. I did “for the first time in my life” read the terms and conditions for this type of service :slight_smile: Fortunately they were not so long and can be found here:
https://help.netflix.com/fr/legal/termsofuse

What clearly not allowed is sharing its password with someone outside your household (4.2 of terms and conditions).

But about residence and country of use, I did not found anything that would say that it’s not allowed (4.3 only state that it is only allowed to use in geographic countries where they have license to show the content).

Maybe I missed it, could you point out which point of the terms and conditions you meant?

Have you noticed this: “You may access the Netflix content primarily within the country in which you have established your account”?

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From a tax perspective, there’s little difference between opening a Netflix account in another country via VPN, and using any other foreign online service which does not pay taxes in Switzerland.

The real problem is that after 30 years of the WWW, the world still hasn’t come up with a logical taxation system for online activities. Why would it be “wrong” to use a Netflix account which isn’t taxed in Switzerland, but “right” to use an online stock broker which isn’t taxed in Switzerland? What about foreign advertisements on social media which are not taxed in Switzerland? In my opinion, a flat tax on all online value creation which levels the playing field for local/offline businesses could be a logical approach. Complicated, but logical.

It is also important to understand that for a company like Netflix, users sharing their accounts with other people pretty much equates to a customer-referral service. People who are potential Netflix customers will likely end up getting their own subscription at some point. Those who aren’t potential customers still get the branding, and may become customers down the line or at least advertise by word-of-mouth, etc. That was the original concept of shareware back in the 80s/90s. For a company with a virtual product, there’s little value on being overbearing. Anyone who really wants to could theoretically stream pirated Netflix shows (that is not illegal in Switzerland), and how would Netflix profit from that?

Actually not really from a VAT point.

If you sell services above a certain threshhold (lets say 100’000 CHF), the company is supposed to pay VAT in the local country.
To keep the example of Netflix : it has sales over 100’000 CHF in Switzerland. Even as a foreign entity it has to create a local VAT- account and pay VAT to services sold to Switzerland.

So basically, if you use a VPN to get services from Netflix trough Turkey, you are actually tax evasion. And since you actively trick Netflix by saying you are a resident in Turkey, you could be held responsible (and not Netflix which is normally supposed to levy the VAT).

About corporate taxes you are right, it is a problem of companies being easily able to transfer via licensing cost to a tax haven in the cayman Islands, whereas the value creation (and the necessary infrastructure for it) is in other countries

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VPN is included. However, I agree that all providers do not fully enforced their terms and conditions. Some are more laxier than others, Netflix being one of them.

They have the means to make it difficult, it’s just a product decision (e.g. they cranked down a lot on password sharing afaik).

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