Hello Everyone,

I want to start my dropshipping site, but I still did not find the right formula in regards to tax.

I am dropshipping from China and selling to Switzerland. Problem is that usually Switzerland charges 8% VAT on imported goods. Since I have to charge VAT to my Swiss clients, once they receive the goods they would also be required to pay a second time the VAT since the item was imported from abroad.

So in fact they are paying twice which is wrong. When I talked to the tax office here, they told me that I could ask for the items to be delivered to my office (i would then be responsible for paying the VAT import tax) and then ship it to the buyer in Switzerland. Through that they would only pay the VAT once, when they purchase through my store. This scenario though increases costs since I will have to re-ship the item once it arrives to me and will only add further delay to the delivery.

The other scenario would be to use a company outside Switzerland. In that case, I am not obliged to charge VAT to Swiss clients (since the registration of my shop would be abroad and not in Switzerland). In that case, they would pay the VAT once the item is delivered to them and only once. So far this is the best scenario I can think of...

What's the best scenario you think? How do other dropshippers do it?

Hi Ant,

You cannot really avoid VAT charges from your drop shipper in China if they have a physical store. Otherwise, if they (China supplier) don't have a physical store (or office), wherein everything is virtually done online, then that's one exception wherein they (supplier) don't charge you with sales tax. Given that they (China supplier) have a physical store, then your customers will really have to pay twice with VAT charges as the law requires it.

I know you're worried of not having enough profitability due to so many charges incurred, but one tip when importing products is to sell something that's rarely found in your country, avoiding competition, making enough room for profit.

Hope this helps.