Is it worth moving to CH to save tax on ebook sales?

Finance, Taxes, Banking, Insurance and Retirement
1
Hello everyone! I come to ask you for help understanding whether it makes financial sense for my partner and I to try to move to Switzerland in the new year.

Together he and I run a popular website. Currently our only income from the website is from Google ads (AdSense), but that will change soon as we are about to publish an ebook. We hope to make enough money off of the combination of the AdSense income and the ebook sales that we can quit our day jobs and devote ourselves full-time to expanding the website. Since working full-time on the site can be done anywhere in the world, we are considering moving to a tax haven such as the canton of Zug.

My questions for you (which I've been unable to answer for myself through googling) are:

1. For an income consisting entirely of ebook sales and AdSense, would we have to set up a company, or would the income be taxable as personal income (similar to if we were employees of a company)?

The next questions apply if we do have to set up a company:

2. Would it make more sense to start a Sole Proprietorship in one of our names (and let the other person appear to not be working), or to start a Kollektivgesellschaft?

3. Registration costs for a Sole Proprietorship are supposedly 500-2500 CHF, and for a Kollektivgesellschaft they are 2500-5000 CHF. Why do the costs vary so much, and what they would likely be in our case?

3. Do you think we could convince the authorities that our business plan is viable? We know how much we make on AdSense, but before we actually start selling the ebook, we obviously don't know for sure how many sales it will generate.

4. Would we be able to forgo the rent for a 'domicile' and just work from home (i.e. from the apartment we would rent)?

5. Similarly, could we forgo company insurance (which I understand is required for fire, water, operational liability)?

6. We intend to make the comparison of (Danish tax + rent of apartment) vs. (Swiss tax + personal insurance + rent of apartment). Are there any other costs of living in Switzerland that may surprise us? (We do realize that costs of living are even higher than they are here.)

Thank you for reading these questions. I look forward to your reply!

2
If I understand correctly, you are thinking to move yourself and your business from Denmark to Switzerland for tax purposes, and yet you are worrying about the necessity and cost of setting up a company?

I suggest you do some research about your legal obligations and cost of living before you decide that CHF 2500-5000 is too high a price to pay. Clearly, if your business isn't making much money, then it does not make sense to relocate. What's the turnover?

3
Thanks for replying. Our expected income in 2013 from the site is at least 30,000 CHF. We have some savings (about 20,000 CHF). And we are willing to live cheaply at first - of course the idea is to make more money eventually, as we develop the site further, increasing ad revenue, and write more ebooks.

We realize it may not make sense to incur the costs of setting up in Switzerland until the business is more profitable, but we figure the tax savings may be worth it. - That's why I'm asking!

4
My accountant once told me: If the profit (i.e. CHF 30000-running costs) is less than CHF 5000 then you can just include it on your personal tax return. If the turnover exceeds CHF 70000 then you need to be Swiss VAT registered (which means you need to create a company).

It all depends on how you see you business growing. If you think you will be turning over more than CHF 70000 within 12months or so, then definately think about creating a company immediately.

5
Thanks for the information. Given that we have no real running costs for equipment, software or anything else - the only resource is our time - what would be the reason to create a company before we start making enough to reach the 70000 CHF in 12 months limit?

6
Instead of coming here, clogging up the system and penny pinching, why don't you just go to the Caribbean with no income tax, sit on the beach and work on your website.

People think it's paradise here.

7
Question: Is this your full-time job?

You would need to demonstrate yourself as being financially independent in order to move to Switzerland. CHF 30k would not be considered enough. If you create a company, then you can take a salary from the company, and the profit is zero, therefore no tax to pay. But I can only imagine the same is true in Denmark, so the whole idea to move to Switzerland does not make sense unless you think you're going to be growing and making lots of $$$$ in a short space of time.

8
Tell me more! How expensive is your insurance?

Incidentally, we've considered California, too.

9
In Denmark we have to pay like 30% in income tax on the 30,000. (But then we don't have to pay health insurance.) If we could pay <20% ( ) of those 30,000 in tax and insurance in CH (or elsewhere), we would be saving at least 3000 CHF just in our first year.

10
Switzerland is not for you. When you sell your website for millions you can come here. Otherwise, Caribbean or Asia.

11
You may be right, but on what grounds do you declare so definitively that Switzerland isn't for us?

12
Because you don't make enough money yet. Switzerland has slightly lower tax rates but there are many other costs which you do not know about.

13
So please enlighten me! What are those costs? Health insurance, what else?

14
Indirect taxes such as Billag, bin bags etc.

Source

15
I'll offer these grounds for consideration: an apartment alone will cost you 30,000 francs a year. Do you have other income?

If you intend on living on 30k francs...I recommend the Philipines or Costa Rica. I think a couple in Switzerland just makes it by on a combined minimum of 100-110k per year.

To me...its not worth it for that little income.

16
two people will not be able to have a comfortable life on 30K per year in Switzerland. Conservatively estimating you'd need to spend 1500/ month on rent (more likely 2K) as I take it it'll need to be big enough as it'll be your home and office. That's 18000 per year on rent. Also conservatively calculating health insurance you'll need to probably pay at least 200 Fr per person per month so 4800 per year.

This means you'll have at most around 7k per year or around 600 Fr per month for two people for everything else which you can forget about being enough

17
Can you get away with not paying the Billag? (In Denmark one doesn't have to pay the equivalent. It's required, but if they come knocking (which only happens very rarely) and you claim that you are a neanderthal who doesn't own any devices that can play TV/radio, they can't force their way in.)

And how much can bin bags possibly cost?

Again, thanks for the information; I really appreciate the reality check!

18
Please use the forum search function for eg Billag etc.

Be prepared to be vegetarians

Think of CH as about the same as in Norway !

19
Economica, to give you an idea: The poverty line is considered to be (in 2010) 2250pm for a single person, 4000pm for a family of four. For two people, your projected 30,000 pa will be scraping the poverty level.

http://www.bfs.admin.ch/bfs/portal/d...key/07/01.html

This thread makes for interesting reading:

Cost of living - help needed to get it right

20
Which size apartments are we talking here? You guys may have a different idea of what constitutes the bare minimum than we do. Think of us as college students, though we're a bit older than that.