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  #21  
Old 26.03.2020, 21:38
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Re: Day trading and declaration of taxes

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In general, and not restricted to the below, they will class you as professional if:
Will add that it's more likely if you work in finance and also for years when the markets are up (because you can deduct losses from your taxable income as a professional trader).
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  #22  
Old 27.03.2020, 08:40
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Re: Day trading and declaration of taxes

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This is the most accurate answer IMO. The original official doc is here (page 3).
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Old 28.10.2020, 00:40
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Re: Day trading and declaration of taxes

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I do have some experience here as I'm classed as a professional trader, even though it's not my main source of income.
Could you confirm how the amount of tax you owe is calculated when classed as a professional trader? i.e. do you have to pay social contributions (OASI pillar 1/disability/etc) on it, or only your marginal tax rate, or something else entirely?

So, in a place like Zurich where marginal tax can approach 40%, once you add the various contributions, should I expect almost 50% of capital gains to be taken away, or I am missing something?
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  #24  
Old 28.10.2020, 02:13
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Re: Day trading and declaration of taxes

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Could you confirm how the amount of tax you owe is calculated when classed as a professional trader? i.e. do you have to pay social contributions (OASI pillar 1/disability/etc) on it, or only your marginal tax rate, or something else entirely?

So, in a place like Zurich where marginal tax can approach 40%, once you add the various contributions, should I expect almost 50% of capital gains to be taken away, or I am missing something?
Yes

I don't think you are missing anything, Switzerland is probably the wrong location to come to if you wish do do this.
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  #25  
Old 28.10.2020, 02:57
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Re: Day trading and declaration of taxes

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This is the most accurate answer IMO. The original official doc is here (page 3).
One of the interesting points in the assessment on page 3 is examination of the use of margin, or where the taxable gains exceeds the margin costs. (If I understood correctly-actually I find the use of taxable gains somewhat recursive here, given the role this section has in determining tax liability).

Given some Lombard loan credit is available interest-free (Swissquote), this opens up some interesting scenarios in the current market conditions, and zero/negative/low interest rate environment.

Now that I'm older, I'd certainly value the choice of abandoning the restrictive Pillar 2 system in favour of self-investment of my and my employer's statutory contributions. Referendum initiative anyone?
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Old 28.10.2020, 09:22
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Re: Day trading and declaration of taxes

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Yes

I don't think you are missing anything, Switzerland is probably the wrong location to come to if you wish do do this.
(thanks for reading my other posts and keeping track of who I am!)

This is a secondary consideration and I would be coming for the job and the environment, not for my trading on the side

It's just a bit disappointing that's all, I thought Switzerland was friendlier than neighbouring EU countries about these things. Would it be possible or make sense to open a company (perhaps in Zug or a low tax canton?) and trade in the company's name instead? I don't really need to draw a salary from it as I won't be living from the profits, although eventually of course I will want to unlock the gains.
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Old 28.10.2020, 12:26
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Re: Day trading and declaration of taxes

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(thanks for reading my other posts and keeping track of who I am!)

This is a secondary consideration and I would be coming for the job and the environment, not for my trading on the side

It's just a bit disappointing that's all, I thought Switzerland was friendlier than neighbouring EU countries about these things. Would it be possible or make sense to open a company (perhaps in Zug or a low tax canton?) and trade in the company's name instead? I don't really need to draw a salary from it as I won't be living from the profits, although eventually of course I will want to unlock the gains.
Your other problem with CH is wealth tax as your capital grows above a couple of million. I moved to Malta where I have no liability to CGT or a wealth tax, makes high rates of compound return even more juicy.
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  #28  
Old 31.10.2020, 14:05
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Re: Day trading and declaration of taxes

One more question I had: is the distinction between private and professional investor an "all or nothing" classification? For example, if you had a brokerage account with some long-term ETF holdings that you held for the long term (years) and a separate trading account for your more frequent trading activities (futures, forex, crypto, whatever tickles your fancy), would there be just one determination of private/professional that applies to both accounts, or would the status of each account be determined separately?
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  #29  
Old 01.11.2020, 20:14
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Re: Day trading and declaration of taxes

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One more question I had: is the distinction between private and professional investor an "all or nothing" classification? For example, if you had a brokerage account with some long-term ETF holdings that you held for the long term (years) and a separate trading account for your more frequent trading activities (futures, forex, crypto, whatever tickles your fancy), would there be just one determination of private/professional that applies to both accounts, or would the status of each account be determined separately?
the tax return is one only.

Btw how do you find the time to work full time and also trade full time? Afaik most employers do not like that for their employees as you need to monitor the markets all the time plus regulations do not allow if you work in finance.
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  #30  
Old 02.11.2020, 10:04
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Re: Day trading and declaration of taxes

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the tax return is one only.

Btw how do you find the time to work full time and also trade full time? Afaik most employers do not like that for their employees as you need to monitor the markets all the time plus regulations do not allow if you work in finance.
I don't trade so frequently that I need to monitor the market all the time (typically a trade every 2-3 weeks on one underlying asset). My entries and exits are fully determined by rules that I decide ahead of time and backtest, so I can place entries and stops accordingly and let it go on its own. I coded a bot to help me do it too, although I will manually monitor it daily as well. The analysis takes much more time than the trading itself, but I do it in my free time (not during work!). To be honest I'm still learning and have only placed a small sum for playing around. I'm encouraged by the results and will gradually be scaling up. Maybe when the amount is more important, or if/when I trade more things at once, this relaxed attitude won't work anymore

I am in finance and we are prohibited from trading some but not all asset classes, e.g. stocks and industry specific indices are banned but broad indices are OK, forex is OK, etc.
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  #31  
Old 01.01.2021, 20:13
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Re: Day trading and declaration of taxes

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Your other problem with CH is wealth tax as your capital grows above a couple of million. I moved to Malta where I have no liability to CGT or a wealth tax, makes high rates of compound return even more juicy.
Do you just need to rent an apartment in Malta to be considered resident there? Or do you actually have to spend half of the year there, and prove that you were physically there?
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  #32  
Old 10.04.2021, 19:02
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Re: Day trading and declaration of taxes

Hello,

Im trying to understand the tax implications if one is considered as a professional trader here. I have some beginner questions if someone can help explain.

Lets say for simplicity in a year I make two trades one loosing -50kCHF the other +80kCHF, so total profit 30kCHF. Would I have to pay capital gains on the 80kCHF trade and then also income tax on the 30kcHF profit or is it only income tax thats levied on the total 30kCHF?

how would one best optimize their tax situation if they are a professional trader here? setting up a company? or is it just not an ideal place to be one?..please kindly explain

thank you
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  #33  
Old 10.04.2021, 19:45
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Re: Day trading and declaration of taxes

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Lets say for simplicity in a year I make two trades one loosing -50kCHF the other +80kCHF, so total profit 30kCHF. Would I have to pay capital gains on the 80kCHF trade and then also income tax on the 30kcHF profit or is it only income tax thats levied on the total 30kCHF?
Personal income tax on 30k at your marginal tax rate + 10.6% AHV.
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  #34  
Old 20.04.2021, 13:06
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Re: Day trading and declaration of taxes

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Personal income tax on 30k at your marginal tax rate + 10.6% AHV.
This applies for professional investor case, right?
Is AHV higher for these profits? I dont think i pay as much as 10.6% on my salary.
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  #35  
Old 20.04.2021, 13:30
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Re: Day trading and declaration of taxes

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This applies for professional investor case, right?
Is AHV higher for these profits? I dont think i pay as much as 10.6% on my salary.
True, you only get 5.3% deducted from your salary. But you and the employer pay the same, together that's 10.6%. Since you're essentially self-employed WRT the trading you have to pay both halves on the trading gains.
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  #36  
Old 20.04.2021, 16:04
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Re: Day trading and declaration of taxes

Two trades will not make you a professional trader - so I assume you mean multiple trades.

First, there is a big difference between a professional trader in the eyes of the taxman, and being a professional trader for compliance purposes with a bank or broker.

Capital gains are mostly untaxed in Switzerland for private traders. You will be classed as a professional by the taxman if your capital gains are the main source of your income and if you are buying and selling shares holding them for short periods and trading very frequently.

Your net gain if you are taxed is calculated by your net overall gains, less commissions and stamp duty (where applicable). This is then added to your income and taxed accordingly. However, you can also deduct subscriptions to, for example, Reuters, exchange fees, phone bills, computer equipment and so on.
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Old 20.04.2021, 16:12
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Re: Day trading and declaration of taxes

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Two trades will not make you a professional trader - so I assume you mean multiple trades.

First, there is a big difference between a professional trader in the eyes of the taxman, and being a professional trader for compliance purposes with a bank or broker.

Capital gains are mostly untaxed in Switzerland for private traders. You will be classed as a professional by the taxman if your capital gains are the main source of your income and if you are buying and selling shares holding them for short periods and trading very frequently.

Your net gain if you are taxed is calculated by your net overall gains, less commissions and stamp duty (where applicable). This is then added to your income and taxed accordingly. However, you can also deduct subscriptions to, for example, Reuters, exchange fees, phone bills, computer equipment and so on.
Is that true even if you are retired?
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  #38  
Old 21.04.2021, 09:30
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Re: Day trading and declaration of taxes

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Is that true even if you are retired?
Yes, I'm afraid it is. An 75 year old friend of mine was hit for taxes on his trading profits a few years ago. I advised him how he could generate the same sort of returns by trading less, and after a lawyers intervention and some serious discussions the taxman agreed he would no longer be classed as a professional trader in their eyes.
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  #39  
Old 21.04.2021, 09:40
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Re: Day trading and declaration of taxes

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Do you just need to rent an apartment in Malta to be considered resident there? Or do you actually have to spend half of the year there, and prove that you were physically there?
You are supposed to be there for half the year, it's a Schengen country so your in & outs are not recorded except with COVID contact tracing forms at the moment!
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Old 21.04.2021, 09:55
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Re: Day trading and declaration of taxes

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Yes, I'm afraid it is. An 75 year old friend of mine was hit for taxes on his trading profits a few years ago. I advised him how he could generate the same sort of returns by trading less, and after a lawyers intervention and some serious discussions the taxman agreed he would no longer be classed as a professional trader in their eyes.
Thanks! Interesting that professional status can be rescinded. I had thought the only way out was to flee the canton .

What I meant was - say I'm 65 and getting 30k or so chf AHV. I have a buy and hold strategy but sell 70k of assets a year to generate money to live off (imagine thats 35k initial capital with 100% return).

Or for that matter if I retire at 55 and am living solely from capital gains (again from the sale of long held assets).
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