As an occasional trader, would I need to pay income taxes to Switzerland?
Is there any capital gain rate?

I have read that it applies on professional traders, well I am not really a professional, but a salary rounder .

Thanks.

I think as a private/hobby trader you pay income tax on dividends, but not on potential and realised quotation winnings. Zero-bonds ere exempt from this. Well that's a first answer until the pros come back from the weekend.

There are a published set of rules defining the professional trader. Among the parameters are:

• High frequency of trading
• Low holding duration
• Substantial volumes traded
  
• Using borrowed money or leverage
• Professional knowhow, e.g. banker
• Complexity of instruments
• Capital gains disproportionate to income

It all depends on the assessing tax officer! They are said to be lenient in ZH. Unless you are on their radar.

Ok, should they define you a professional trafer, how much would you pay of your income?

And also... even if I trade on forex do I need to declare my income in somewhat way?

Thanks.

Hi Goldtop, I don't mean to be rude, but I find that your colour and font distracts from the content of your posts

Very unlikely that you are classified as professional trader. If you are, then the same rules apply as for any profession.

Net capital gain is capital gains minus any capital losses minus expenses.

Net gain is added to other income and taxed as income. Moreover, this trading income is also liable to social-security contributions.

If you are raking it in big time, then the taxman might want to join the party!

Irrelevant what you trade in. Any connection between your "other" profession, (e.g. you are a banker/broker) and your trading activities? Then it is one more common-sense reason to view the trading as professional.

My other profession is the Engineer, so there is no connection...
What do you mean as "ranking it in big time"?

Raking not ranking. Like pulling in large amounts
http://www.merriam-webster.com/cgi-b...nary&va=raking

Thanks.... ?

Hi Goldtop,

Please can you quote the source you used for the definition of a Professional Trader.

Thanks in advance

You have to be licensed as well to be a professional I think
I work near traders at Large Bank and picked this up a few weeks ago.

If you're just punting a bit of money on UBS, I'm sure they won't be interested...

This is a complex topic!

The Federal Guideline is in this document (sorry, Swiss Government document, only in Swiss official languages, here the German version):
http://www.estv.admin.ch/d/dvs/kreis...-DV-2008-d.pdf

Each canton has its own implementation style. And each tax assessing officer uses his/her discretion. So, you only discover after filing, whether the tax department considers you to be a "professional trader" for tax purposes.

You may be so classified, and trading profits added to taxable income, when you:

• Obtain significant trading profits comparable to other income.
• Have professional trading skills (e.g. finance qualifications, work for a Bank, etc.).
• Leveraged, i.e. borrowed money, including house mortgage.
• Large number of trades.
• Short holding periods.
• etc.

Suggest you talk to your broker/bank and/or consult a tax specialist. You can also get a binding advance decision from the tax department, but would of course need to reveal many details and thus attract attention.

This thread pertains to the income tax implications of trading and how the taxman views trading profits.

No license needed if you are only trading your own money. Registration for finance regulatory aspects, or to obtain preferential conditions at an exchange, is another topic.

Thanks for the help goldtop.

Generally, if you know what you are doing and subsequently earn money, you are guilty and you'll have to pay. They call you professional. Or you'll have to adapt your trading strategy, so that you won't be classified as a professional trader, which in some cases is rather impossible.

The capital gains obtained by the residents of Switzerland are taxed even if the opposite is claimed. Only "small" capital gains are not taxed which is rather irrelevant.

Considering the diversity and progressive tax system, Switzerland is no low tax country by far. The taxes are in my opinion medium to high.

Taxation in Switzerland is progressive. Low taxes for low incomes, medium taxes for medium incomes and high taxes for high incomes. Moreover, "professional traders" would have to pay social-security contributions of about 10%.

Capital-gains are tax free for investors. Example, you now buy a stack of cheap UBS shares and sell them after a year: that is tax free.

Anyone trading may have the misfortune of being branded as "professional". However, the rumor is that very few, at least in ZH, are thus classified.

Hi Goldtop, Is that a stated rule then that if you hold shares for over one year then they will not be classed as a trading activity?

Also do you know if capital gains realised in a UK tax shelter (ISA - Individual Savings Account) would have to be recorded on the tax return?

The strict rules on trading taxation are here:
http://www.estv.admin.ch/d/dvs/kreis...8-D-2005-d.pdf
(I had posted a wrong link earlier, sorry)

See page 3. Rule #1 states that the investment period must be minimum 1 year. There are 5 more rules. All 6 criteria must be "cumulatively" fulfilled to be certain of not paying capital gains tax.

If one or more criteria are not fulfilled, then the assessing officer can decide whether the capital gains should be taxed.

I am completely ignorant about UK tax shelters and cannot comment on the tax impact. This much is clear: You are a Swiss resident. You must declare your global income, assets and capital-gains. The tax is assessed based on Swiss tax law. The tax exemptions in another jurisdiction are irrelevant.

You can however attempt explaining to the tax commissioner why you should be exempt. My impression is that the Swiss tax officers are approachable, fair, intelligent and of high integrity. You can also ask for and get a binding tax ruling before you invest or before you submit the tax return.