Geoarbitraging, offshoring, taxes, morality

Tax evasion is a pretty strong word. It’s a grey area. For example, you can physically import up to 300 francs of goods into Switzerland without paying VAT. Do virtual goods (e.g. online services) purchased abroad fall under this exemption? Nobody knows, because there is no legal precedent. How about foreign advertising to Swiss Internet users when the advertisers are foreign? How should that be taxed? There’s obviously a lot of room for improvement in this regard.

But unless a judge rules that it is illegal to use foreign online subscriptions, or share a Netflix subscription, then doing so is not illegal. If you breech the terms of a contract, it is up to the other party to the contract (e.g. Netflix) to decide whether or not they want to keep doing business with you.

5 Likes

Exactly. AFAIK in switzerland the common practice regarding online services, illegal movie streaming etc. is as long as you only use it for yourself and you dont resell it that it’s not an offence that needs to be prosecuted.

It is not a grey area. The law has been changed in that regard in 2019. Online services which make sales higher than 100’000 CHF worldwide (mistake from my part) and operate in Switzerland are subjected to levy VAT in Switzerland.

The 300 CHF threshhold is only valid if you, as a private person is bringing the goods personnally over the border. In case of delivery, the threshhold is lower.

All this things are perfectly defined.

https://www.gate.estv.admin.ch/mwst-webpublikationen/public/pages/taxInfos/cipherDisplay.xhtml?publicationId=1551451&componentId=1551496

https://www.gate.estv.admin.ch/mwst-webpublikationen/public/pages/taxInfos/cipherDisplay.xhtml?publicationId=1551451&componentId=1551580

This is actually one of the reasons a lot of stuff is not working in Switzerland, because most of the companies won’t make the hassle for Switzerland since it is not worth it (independent traders on Amazon for instance), except if it is already highly automated (Netflix)

1 Like

Personally I think the implementation of VAT for foreign online services was a big step in the right direction. The grey area applies to consumers. It’s clear that companies need to subscribe to VAT in order to legally offer online services in Switzerland, but there is (not yet) any real governance with regards to what you as a consumer can or can’t buy online, in terms of virtual services.

For physical services, the rules are clear: When it is physically imported into Switzerland, you pay customs duties (other than for applicable exemptions). But things are a lot less clear with regards to, say, buying an NFT on a foreign exchange or stream a video on Youtube, largely because there is not yet a concensus on what importing actually means with regards to virtual goods.

interesting, this sentence of 4.3 is only in the english version. The french version is as follows:

VPN is only needed for the subscription, so technically it’s legal if you make your subscription during holiday in Turkey :laughing:

That said, it’s a ToS not a law (so legality is the wrong term).

2 Likes

I wonder how can they even track people doing it. A Turkish worker that opened up their account in turkey, but is a seasonal worker in Germany…for him accessing the content there is perfectly legal. So I think it would be difficult for them to technically distinguish all cases, and not worth the losses.

Additionally, the alternative is factually downloading pirated content. Not moral but not illegal in Switzerland.

So if we don’t want to do the moral thing (paying) , we could revert to the legal thing (pirating) instead of VPN turkey subscription. Is the legal thing really better?

1 Like

There’s bunch of ways if they start caring (ask to verify with a local sim, etc.). I guess tackling password sharing has a much better ROI for them though :slight_smile:

It is important to differentiate between contractual terms and conditions, and law.

Anyone who creates a contract can lay out the terms and conditions of the agreement. These are not laws. If you breech the terms and conditions of a contract, the other party has the right to withdraw from the contract as per the clause governing breech of contract. The other party may be able to sue for damages, again depending on the conditions you agreed to when you signed the contract. The rights and responsibilities of parties to Swiss contracts are dictated in the Swiss civil code.

I could write out a contract filled with ridiculously absurd terms and conditions, within the boundaries of what is legal. If you sign it, you are agreeing to abide by my T&Cs. That would harldly be a useful precendent for determining whether something is legal or illegal.

Laws are something else altogether. A law can only come into existence through clear democratic and legal processes. If a Swiss law explicitly prohibited opening online accounts from Switzerland using VPNs, then doing so would be illegal.

If a Swiss judge rules on a case in this regard, that would set a precedent, and this could be considered a legal basis for determining whether or not something is allowed. But even then, until that precedent passes through the legal process to become law, it is not yet law.

In short, not complying with Netflix T&Cs is not illegal, but Netflix has the contractual right, as per its T&Cs, to withdraw from the contract.

5 Likes