Go Back   English Forum Switzerland > Living in Switzerland > Business & entrepreneur  
Reply
 
Thread Tools Display Modes
  #1  
Old 09.04.2021, 19:41
Newbie
 
Join Date: Feb 2021
Location: Zurich
Posts: 5
Groaned at 0 Times in 0 Posts
Thanked 1 Time in 1 Post
StolenOrgan is considered knowledgeableStolenOrgan is considered knowledgeableStolenOrgan is considered knowledgeable
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?
Reply With Quote
  #2  
Old 10.04.2021, 18:24
Member
 
Join Date: Feb 2020
Location: Zurich
Posts: 156
Groaned at 20 Times in 9 Posts
Thanked 143 Times in 79 Posts
spark is considered knowledgeablespark is considered knowledgeablespark is considered knowledgeable
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.

Quote:
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.
Reply With Quote
  #3  
Old 11.04.2021, 12:29
eng_ch's Avatar
Forum Veteran
 
Join Date: Nov 2005
Location: Up where the air is clear
Posts: 1,788
Groaned at 4 Times in 4 Posts
Thanked 1,807 Times in 911 Posts
eng_ch has a reputation beyond reputeeng_ch has a reputation beyond reputeeng_ch has a reputation beyond reputeeng_ch has a reputation beyond reputeeng_ch has a reputation beyond repute
Re: Good setup for wealth accumulation?

Quote:
View Post
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
Reply With Quote
  #4  
Old 11.04.2021, 12:46
fatmanfilms's Avatar
Forum Legend
 
Join Date: Apr 2010
Location: Verbier
Posts: 21,376
Groaned at 461 Times in 352 Posts
Thanked 23,091 Times in 11,824 Posts
fatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond repute
Re: Good setup for wealth accumulation?

Quote:
View Post
Especially since incorporation requires a minimum 20k deposit in the company
That can be invested immediately, so just the legal costs are 'lost'
Reply With Quote
  #5  
Old 11.04.2021, 13:07
Rangatiranui's Avatar
Forum Veteran
 
Join Date: Nov 2007
Location: Baden region
Posts: 2,184
Groaned at 14 Times in 13 Posts
Thanked 2,469 Times in 1,088 Posts
Rangatiranui has a reputation beyond reputeRangatiranui has a reputation beyond reputeRangatiranui has a reputation beyond reputeRangatiranui has a reputation beyond reputeRangatiranui has a reputation beyond reputeRangatiranui has a reputation beyond repute
Re: Good setup for wealth accumulation?

Quote:
View Post
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.......
Reply With Quote
The following 12 users would like to thank Rangatiranui for this useful post:
  #6  
Old 11.04.2021, 15:25
Forum Veteran
 
Join Date: Jul 2014
Location: lugano
Posts: 927
Groaned at 160 Times in 81 Posts
Thanked 861 Times in 463 Posts
DL21 has earned the respect of manyDL21 has earned the respect of manyDL21 has earned the respect of many
Re: Good setup for wealth accumulation?

Quote:
View Post
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.
Reply With Quote
  #7  
Old 11.04.2021, 18:04
Member
 
Join Date: Feb 2020
Location: Zurich
Posts: 156
Groaned at 20 Times in 9 Posts
Thanked 143 Times in 79 Posts
spark is considered knowledgeablespark is considered knowledgeablespark is considered knowledgeable
Re: Good setup for wealth accumulation?

Quote:
View Post
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
Reply With Quote
This user would like to thank spark for this useful post:
  #8  
Old 11.04.2021, 18:43
Jim2007's Avatar
Forum Legend
 
Join Date: Jun 2006
Location: Kt. Bern
Posts: 5,041
Groaned at 269 Times in 210 Posts
Thanked 8,271 Times in 3,646 Posts
Jim2007 has a reputation beyond reputeJim2007 has a reputation beyond reputeJim2007 has a reputation beyond reputeJim2007 has a reputation beyond reputeJim2007 has a reputation beyond reputeJim2007 has a reputation beyond repute
Re: Good setup for wealth accumulation?

Quote:
View Post
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.
Reply With Quote
  #9  
Old 12.04.2021, 08:19
Forum Veteran
 
Join Date: Jun 2009
Location: Zurich
Posts: 514
Groaned at 18 Times in 15 Posts
Thanked 258 Times in 150 Posts
poot is considered knowledgeablepoot is considered knowledgeablepoot is considered knowledgeable
Re: Good setup for wealth accumulation?

Quote:
View Post
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???
Reply With Quote
The following 2 users would like to thank poot for this useful post:
  #10  
Old 12.04.2021, 13:13
Mica's Avatar
Forum Veteran
 
Join Date: Oct 2007
Location: Zurich
Posts: 979
Groaned at 1 Time in 1 Post
Thanked 1,244 Times in 553 Posts
Mica has a reputation beyond reputeMica has a reputation beyond reputeMica has a reputation beyond reputeMica has a reputation beyond reputeMica has a reputation beyond repute
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.
Reply With Quote
  #11  
Old 14.04.2021, 03:23
Newbie
 
Join Date: Feb 2021
Location: Zurich
Posts: 5
Groaned at 0 Times in 0 Posts
Thanked 1 Time in 1 Post
StolenOrgan is considered knowledgeableStolenOrgan is considered knowledgeableStolenOrgan is considered knowledgeable
Re: Good setup for wealth accumulation?

Quote:
View Post
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.

Quote:
View Post
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

Quote:
View Post
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.
Reply With Quote
  #12  
Old 14.04.2021, 08:16
pilatus1's Avatar
Forum Veteran
 
Join Date: Oct 2012
Location: Milky Way
Posts: 1,803
Groaned at 152 Times in 103 Posts
Thanked 4,789 Times in 1,886 Posts
pilatus1 has a reputation beyond reputepilatus1 has a reputation beyond reputepilatus1 has a reputation beyond reputepilatus1 has a reputation beyond reputepilatus1 has a reputation beyond reputepilatus1 has a reputation beyond repute
Re: Good setup for wealth accumulation?

Quote:
View Post
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!

Reply With Quote
The following 2 users would like to thank pilatus1 for this useful post:
  #13  
Old 14.04.2021, 09:53
krlock3's Avatar
Forum Legend
 
Join Date: Feb 2006
Location: Zürich
Posts: 3,117
Groaned at 48 Times in 35 Posts
Thanked 2,426 Times in 1,152 Posts
krlock3 has a reputation beyond reputekrlock3 has a reputation beyond reputekrlock3 has a reputation beyond reputekrlock3 has a reputation beyond reputekrlock3 has a reputation beyond reputekrlock3 has a reputation beyond repute
Re: Good setup for wealth accumulation?

Quote:
View Post
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?
Reply With Quote
The following 3 users would like to thank krlock3 for this useful post:
  #14  
Old 14.04.2021, 12:32
Cata1yst's Avatar
Forum Veteran
 
Join Date: Feb 2012
Location: Zugish
Posts: 566
Groaned at 18 Times in 10 Posts
Thanked 726 Times in 330 Posts
Cata1yst has a reputation beyond reputeCata1yst has a reputation beyond reputeCata1yst has a reputation beyond reputeCata1yst has a reputation beyond repute
Re: Good setup for wealth accumulation?

Quote:
View Post
to the EF, I guess?
Reminds me of the old days, a great 2nd post. I gave blobbies
Reply With Quote
This user would like to thank Cata1yst for this useful post:
  #15  
Old 14.04.2021, 12:37
Axa's Avatar
Axa Axa is offline
Forum Legend
 
Join Date: Oct 2019
Location: Suhr, Aargau
Posts: 4,255
Groaned at 72 Times in 67 Posts
Thanked 5,931 Times in 2,794 Posts
Axa has a reputation beyond reputeAxa has a reputation beyond reputeAxa has a reputation beyond reputeAxa has a reputation beyond reputeAxa has a reputation beyond reputeAxa has a reputation beyond repute
Re: Good setup for wealth accumulation?

Quote:
View Post
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
Reply With Quote
This user would like to thank Axa for this useful post:
  #16  
Old 14.04.2021, 15:33
Don Molina's Avatar
Forum Veteran
 
Join Date: Jul 2012
Location: Zurich
Posts: 976
Groaned at 39 Times in 24 Posts
Thanked 1,516 Times in 615 Posts
Don Molina has a reputation beyond reputeDon Molina has a reputation beyond reputeDon Molina has a reputation beyond reputeDon Molina has a reputation beyond reputeDon Molina has a reputation beyond repute
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.
__________________
Nothing is fool-proof to a sufficiently talented fool
Reply With Quote
The following 5 users would like to thank Don Molina for this useful post:
  #17  
Old 14.04.2021, 18:53
Newbie
 
Join Date: Feb 2021
Location: Zurich
Posts: 5
Groaned at 0 Times in 0 Posts
Thanked 1 Time in 1 Post
StolenOrgan is considered knowledgeableStolenOrgan is considered knowledgeableStolenOrgan is considered knowledgeable
Re: Good setup for wealth accumulation?

Quote:
View Post
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.
Reply With Quote
  #18  
Old 15.04.2021, 09:17
newtoswitz's Avatar
Forum Legend
 
Join Date: Jan 2010
Location: Rapperswil
Posts: 3,754
Groaned at 75 Times in 70 Posts
Thanked 4,537 Times in 2,076 Posts
newtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond reputenewtoswitz has a reputation beyond repute
Re: Good setup for wealth accumulation?

Income > expenses will do it every time, anything else is just detail
Reply With Quote
The following 2 users would like to thank newtoswitz for this useful post:
  #19  
Old 15.04.2021, 11:50
Village Idiot's Avatar
Forum Legend
 
Join Date: Jul 2009
Location: Basel
Posts: 3,725
Groaned at 35 Times in 32 Posts
Thanked 7,006 Times in 2,266 Posts
Village Idiot has a reputation beyond reputeVillage Idiot has a reputation beyond reputeVillage Idiot has a reputation beyond reputeVillage Idiot has a reputation beyond reputeVillage Idiot has a reputation beyond reputeVillage Idiot has a reputation beyond repute
Re: Good setup for wealth accumulation?

This is like a Venn diagram of EF meets WSB.
Reply With Quote
The following 9 users would like to thank Village Idiot for this useful post:
  #20  
Old 16.04.2021, 21:26
Forum Legend
 
Join Date: Jul 2020
Location: Frick, Aargau
Posts: 2,876
Groaned at 62 Times in 50 Posts
Thanked 4,070 Times in 1,901 Posts
HickvonFrick has a reputation beyond reputeHickvonFrick has a reputation beyond reputeHickvonFrick has a reputation beyond reputeHickvonFrick has a reputation beyond reputeHickvonFrick has a reputation beyond reputeHickvonFrick has a reputation beyond repute
Re: Good setup for wealth accumulation?

Quote:
View Post
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.
Reply With Quote
Reply




Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Wanted : Everything to Setup a new Apt dennis Items wanted 11 26.04.2018 22:09
New business setup Theone Business & entrepreneur 16 20.04.2018 17:02
Finding out divvies/income from accumulation ETFs justcamehere Finance/banking/taxation 2 29.04.2017 17:00
Share Your Sat-TV Setup! esto TV/internet/telephone 11 11.05.2011 19:16
paypal setup caninsui Finance/banking/taxation 3 25.01.2011 11:25


All times are GMT +2. The time now is 09:24.


Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2022, Jelsoft Enterprises Ltd.
LinkBacks Enabled by vBSEO 3.1.0