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Old 09.04.2021, 19:41
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Good setup for wealth accumulation?

Hi.

What is a good setup in Switzerland for a wealth accumulation in order to pay as little taxes?

My situation:
- I have a full-time job in Switzerland
- I invest 70% of my net salary in stock market (ETFs)
- I sell options on a derivatives market and receive premiums
- I use borrowed capital for investing (currently Reg-T margin, but I plan to change to portfolio margin soon)
- I'm new in Switzerland and from what I read so far, I would be considered as as a "professional trader" by tax authority and have to tax all my capital gains and options premiums as an income according to to my marginal tax rate
- In future I plan to also buy rental properties on a mortgage

My question:
What is the optimal way of wealth accumulation with a Swiss residency to pay as little taxes as possible from my trading & investing activity?

A solution that come to my mind:
Set up a holding company in Switzerland. Get a LEI number from Bloomberg. Move my brokerage account and all trading activity to this company. This way I would pay just flat corporate income tax, instead of the progressive personal income tax. I could do more tax deductions (e.g. flight tickets for a "business meeting" and hotel bookings as an expense, etc.)

Any issues with this solution? Any better options? Which company type is the best for a holding company?
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Old 10.04.2021, 18:24
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Re: Good setup for wealth accumulation?

Set up holding company in Cayman, BVI, Bermuda etc like everyone else in biz. CH is not that popular choice to domicile your home office.


Also, unless your wealth is in million range already, you'd do better by focusing on increasing your income instead of optimizing expenses/taxes.

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This way I would pay just flat corporate income tax, instead of the progressive personal income tax
You're going to pay your personal income tax later when you take any money from your company. At a reduced rate as a 10%+ shareholder, but still unlikely you'd save much money by incorporating. Incorporation mainly gives you tax certainty and separation of personal assets from corporate.
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Old 11.04.2021, 12:29
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Re: Good setup for wealth accumulation?

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still unlikely you'd save much money by incorporating. Incorporation mainly gives you tax certainty and separation of personal assets from corporate.
Especially since incorporation requires a minimum 20k deposit in the company
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Old 11.04.2021, 12:46
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Re: Good setup for wealth accumulation?

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Especially since incorporation requires a minimum 20k deposit in the company
That can be invested immediately, so just the legal costs are 'lost'
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Old 11.04.2021, 13:07
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Re: Good setup for wealth accumulation?

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Hi.


My situation:

- I invest 70% of my net salary in stock market (ETFs)
Oh wow!

Get a husband/wife and some kids.

Problem solved.......
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Old 11.04.2021, 15:25
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Re: Good setup for wealth accumulation?

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but still unlikely you'd save much money by incorporating. Incorporation mainly gives you tax certainty and separation of personal assets from corporate.
rubbish - 40% versus 19% tax.
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Old 11.04.2021, 18:04
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Re: Good setup for wealth accumulation?

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rubbish - 40% versus 19% tax.
It doesn't stop at 19%, that's just corporate side of it. But you're also going to personally pay half of 40% later on top of your corporate 19%. Is that really worth the hassle?

And in BVI/Cayman/etc you have 0%, btw. The rubbish is CH taxes
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Old 11.04.2021, 18:43
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Re: Good setup for wealth accumulation?

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Hi.

What is a good setup in Switzerland for a wealth accumulation in order to pay as little taxes?

My situation:
- I have a full-time job in Switzerland
- I invest 70% of my net salary in stock market (ETFs)
- I sell options on a derivatives market and receive premiums
- I use borrowed capital for investing (currently Reg-T margin, but I plan to change to portfolio margin soon)
- I'm new in Switzerland and from what I read so far, I would be considered as as a "professional trader" by tax authority and have to tax all my capital gains and options premiums as an income according to to my marginal tax rate
- In future I plan to also buy rental properties on a mortgage

My question:
What is the optimal way of wealth accumulation with a Swiss residency to pay as little taxes as possible from my trading & investing activity?

A solution that come to my mind:
Set up a holding company in Switzerland. Get a LEI number from Bloomberg. Move my brokerage account and all trading activity to this company. This way I would pay just flat corporate income tax, instead of the progressive personal income tax. I could do more tax deductions (e.g. flight tickets for a "business meeting" and hotel bookings as an expense, etc.)

Any issues with this solution? Any better options? Which company type is the best for a holding company?
Well the first thing to confirm is that you have the appropriate permit to do all this.

And the second thing is that you'll be so highly leveraged it probably won't matter.
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Old 12.04.2021, 08:19
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Re: Good setup for wealth accumulation?

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Well the first thing to confirm is that you have the appropriate permit to do all this.

And the second thing is that you'll be so highly leveraged it probably won't matter.
what permit do you need to buy rental properties and invest on margin???
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Old 12.04.2021, 13:13
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Re: Good setup for wealth accumulation?

The main advantage of incorporation will be that you would have a liability shield if an overleveraged trade goes bad.
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  #11  
Old 14.04.2021, 03:23
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Re: Good setup for wealth accumulation?

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Oh wow!

Get a husband/wife and some kids.

Problem solved.......
No thanks, I don't need kids nor wife. I prefer banging hookers in eastern europe for 50 €. Better cost/quality, not aging, always available within 2 hours flight from CH.

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Set up holding company in Cayman, BVI, Bermuda etc like everyone else in biz. CH is not that popular choice to domicile your home office.
Setting up an offshore company wouldn't help much. The tax residency of such company would be still in Switzerland, even if it's incorporated on Cayman.

Source: https://www.oecd.org/tax/automatic-e...-Residency.pdf

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The main advantage of incorporation will be that you would have a liability shield if an overleveraged trade goes bad.
I'm not particularly overleveraged. I almost shit myself couple of times before due to margin calls, so I'm very careful with the level of leverage I use. In any case, I'm on Reg-T margin, so my positions would be liquidated long before any trade got a chance to go bad.
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Old 14.04.2021, 08:16
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Re: Good setup for wealth accumulation?

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I prefer banging hookers in eastern europe for 50 €. Better cost/quality, not aging, always available within 2 hours flight from CH.

You might be able to score some even cheaper hookers if you fly a little further for your tax deductible 'business meetings'.

But being a gentleman of fine taste, if spending 50 euros won't affect your investment portfolio, then go for it - treat yourself to top quality!

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Old 14.04.2021, 09:53
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Re: Good setup for wealth accumulation?

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No thanks, I don't need kids nor wife. I prefer banging hookers in eastern europe for 50 €. Better cost/quality, not aging, always available within 2 hours flight from CH.
to the EF, I guess?
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Old 14.04.2021, 12:32
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Re: Good setup for wealth accumulation?

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to the EF, I guess?
Reminds me of the old days, a great 2nd post. I gave blobbies
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Old 14.04.2021, 12:37
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Re: Good setup for wealth accumulation?

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No thanks, I don't need kids nor wife. I prefer banging hookers in eastern europe for 50 €. Better cost/quality, not aging, always available within 2 hours flight from CH.
It's a bit sad that tax consultants are a bit more expensive than this, but.....you save on the transport costs
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Old 14.04.2021, 15:33
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Re: Good setup for wealth accumulation?

Well I guess it makes sense the guy that is writing options is going to be banging 50EUR hookers.

No offense mate, selling vol works in some structurally long instruments in the veeeeery long run, but getting in and/or out at the wrong period and it's all for nought.

There are also specific articles of law designed to keep offshore companies out of CH taxation scope so you can definitely structure this properly for reasonable cost (upfront + carry) if you have a decent size and the right tax consultant/law firm.

I'm sensing a weird combination of FIRE mentality supercharged by your (probably young age) which means you've never seen a proper bear market and the continued notion of "investing is easy money".

I would suggest you try getting a couple of hobbies (prostitution included - not judging) and maybe allocate less than 70% of your salary in the markets. Life is more than money, and if you are that aggressive it's more probably that this money won't be there later.
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Old 14.04.2021, 18:53
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Re: Good setup for wealth accumulation?

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There are also specific articles of law designed to keep offshore companies out of CH taxation scope so you can definitely structure this properly for reasonable cost (upfront + carry) if you have a decent size and the right tax consultant/law firm.
Could you be more specific? I know there are no CFC rules in Switzerland like in most EU countries. But according to the OECD guidance, foreign companies with the place of effective management is in Switzerland will be considered Swiss tax residents by the tax authority.

See here (section II): https://www.oecd.org/tax/automatic-e...-Residency.pdf

Thanks for keeping the discussion on-topic and civilized.
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Old 15.04.2021, 09:17
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Re: Good setup for wealth accumulation?

Income > expenses will do it every time, anything else is just detail
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Old 15.04.2021, 11:50
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Re: Good setup for wealth accumulation?

This is like a Venn diagram of EF meets WSB.
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Old 16.04.2021, 21:26
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Re: Good setup for wealth accumulation?

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Well I guess it makes sense the guy that is writing options is going to be banging 50EUR hookers.

No offense mate, selling vol works in some structurally long instruments in the veeeeery long run, but getting in and/or out at the wrong period and it's all for nought.

There are also specific articles of law designed to keep offshore companies out of CH taxation scope so you can definitely structure this properly for reasonable cost (upfront + carry) if you have a decent size and the right tax consultant/law firm.

I'm sensing a weird combination of FIRE mentality supercharged by your (probably young age) which means you've never seen a proper bear market and the continued notion of "investing is easy money".

Having said that, my wife is starting work in an investment bank shortly, so maybe we can get as high as 70.

I would suggest you try getting a couple of hobbies (prostitution included - not judging) and maybe allocate less than 70% of your salary in the markets. Life is more than money, and if you are that aggressive it's more probably that this money won't be there later.
Hes taken my crown as the most millennial FIRE poster around.

I'm only investing 50%, am not leveraged, and my choice of women (or more accurately, the type of women willing to consider me) has historically been mentally unstable Oxbridgers who aren't charging for the privilege.

My wife is going back to work next month so perhaps we can go up to 70%.

I feel old now.
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