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Old 10.06.2020, 14:18
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Tax and Stocks

Hi everybody!

Im investing in stocks for quiet some time now. Simply buy and hold strategy. I would like to be active with 10% of my portfolio. That means, buy and sell the same underlying in the timespan of 3 months (for example). Since the limit for no taxation is at 6 months, i was wondering what is the practice if you make 5-10 short term trades per year.

-Are you considered as a pro?
-Is because of that the whole portfolio treated as such?
-Or would they tax only the capital gain from those few short term trades?

I did the research on the forum but found no to my situation relevant infos.
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  #2  
Old 10.06.2020, 14:28
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Re: Tax and Stocks

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Hi everybody!

Im investing in stocks for quiet some time now. Simply buy and hold strategy. I would like to be active with 10% of my portfolio. That means, buy and sell the same underlying in the timespan of 3 months (for example). Since the limit for no taxation is at 6 months, i was wondering what is the practice if you make 5-10 short term trades per year.

-Are you considered as a pro?
-Is because of that the whole portfolio treated as such?
-Or would they tax only the capital gain from those few short term trades?

I did the research on the forum but found no to my situation relevant infos.
Absolutely nothing, they won't even know as you only list holdings at 31.12. 10 a day & you could be a trader
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Old 10.06.2020, 15:30
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Re: Tax and Stocks

Well, on my tax return you need to list buy and sell dates. You also need to declare dividends so it is clear at least when you held stock at a dividend date and when you didn't, which also will give an indication of buys and sells.
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Old 10.06.2020, 15:32
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Re: Tax and Stocks

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Absolutely nothing, they won't even know as you only list holdings at 31.12. 10 a day & you could be a trader
You're normally supposed to declare trades, they need them to verify your dividend calculations. If you don't declare they may ask to see your broker statements later, though you could refuse to cooperate

Quote:
-Are you considered as a pro?
You might be. Noone can tell you for certainty except for the tax office responsible for your case. The safe side is to buy & hold for 6 months.
Quote:
-Is because of that the whole portfolio treated as such?
-Or would they tax only the capital gain from those few short term trades?
Whole portfolio, realized capital gains taxed as self employment income at your marginal tax rate and you'd also owe 10.55% AHV on top of tax.
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Old 10.06.2020, 17:18
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Re: Tax and Stocks

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Hi everybody!

Im investing in stocks for quiet some time now. Simply buy and hold strategy. I would like to be active with 10% of my portfolio. That means, buy and sell the same underlying in the timespan of 3 months (for example). Since the limit for no taxation is at 6 months, i was wondering what is the practice if you make 5-10 short term trades per year.

-Are you considered as a pro?
-Is because of that the whole portfolio treated as such?
-Or would they tax only the capital gain from those few short term trades?

I did the research on the forum but found no to my situation relevant infos.
Capital gains are not taxed, only the dividend (35%).

What do you mean with the limit for no taxation is at 6 months? You're always taxed on dividend, regardless how long you hold the stock.

Last edited by Harrie Nak; 10.06.2020 at 18:06.
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  #6  
Old 11.06.2020, 09:45
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Re: Tax and Stocks

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Capital gains are not taxed, only the dividend (35%).

What do you mean with the limit for no taxation is at 6 months? You're always taxed on dividend, regardless how long you hold the stock.
Capital gains are not taxed under certain conditions. The 6 months IceCold is referring to are one of such conditions.

Last edited by roegner; 21.06.2020 at 17:44. Reason: Removed what looks like advertising
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  #7  
Old 11.06.2020, 13:31
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Re: Tax and Stocks

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Capital gains are not taxed under certain conditions. It's explained here or here. The 6 months IceCold is referring to are one of such conditions.
Making 10 trades in a year is never a professional activity, even the laziest person should realise this.
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Old 11.06.2020, 14:01
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Re: Tax and Stocks

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Making 10 trades in a year is never a professional activity, even the laziest person should realise this.
I agree with you, I don't think IceCold is at risk of being considered a professional trader. Just pointing out that there is no general capital gains tax exemption in Switzerland. There are some conditions the tax authorities can use as a decision framework on a case-by-case basis.
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Old 11.06.2020, 16:17
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Re: Tax and Stocks

At this level you will not be considered professional. You're professional when you start to trade multiple products, including CFD's, options (long and short) multiple times per month and have a reasonably substantial portfolio.

In this case your gains are added to your income and you are taxed accordingly. You can of course also deduct any losses.

Some ways to mitigate this are to create a company or open an account in another canton. There is no exchange of information between the cantons!
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Old 22.06.2020, 19:05
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Re: Tax and Stocks

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At this level you will not be considered professional. You're professional when you start to trade multiple products, including CFD's, options (long and short) multiple times per month and have a reasonably substantial portfolio.

In this case your gains are added to your income and you are taxed accordingly. You can of course also deduct any losses.

Some ways to mitigate this are to create a company or open an account in another canton. There is no exchange of information between the cantons!
Which are the cantons with the lower taxation for profesional investors?

I gonna move with my wife to Lausanne, she got a job there, but my main source of income, at least at the beginning, will be trading, options included, so I supposed I will be consider as professional investor even when I will not invested thousands.

With that in mind, what will be the taxation for a net profit of 3/4 K per month?

Being married meaning we must declare tax together, and my net profit being added to her salary and tax accordingly to the level?

Thanks in advance
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Old 23.06.2020, 21:36
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Re: Tax and Stocks

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Which are the cantons with the lower taxation for profesional investors?
Zug / Schwyz.
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I gonna move with my wife to Lausanne, she got a job there, but my main source of income, at least at the beginning, will be trading, options included, so I supposed I will be consider as professional investor even when I will not invested thousands.
Yes, probably.
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With that in mind, what will be the taxation for a net profit of 3/4 K per month?
https://swisstaxcalculator.estv.admi...ome-wealth-tax
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Being married meaning we must declare tax together, and my net profit being added to her salary and tax accordingly to the level?
Yes.
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  #12  
Old 24.06.2020, 10:56
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Re: Tax and Stocks

On the same subject, I'm interested in writing put options for income (I anyway use limit buy orders so making some income before it reaches my price - or if it doesn't - seems a good idea).

I'm worried about this pro trader stuff though, could be costly if they tax everything at a higher rate. Writing cash covered put options is not exactly going to make massive profits.

Anybody had experience on this?
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  #13  
Old 24.06.2020, 11:49
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Re: Tax and Stocks

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Which are the cantons with the lower taxation for profesional investors?
All cantons wich have a low income tax.

If you trade on your own AND you are considered a professional trader the net gain (do not forget to list all your losses) is part of your overall income and taxed as such. Just like it is for any other sole proprietorship business. Things might change if you setup a GmbH/Sarl/Ldt.

The definition of professional trader vs. non-professional (which is capital gain tax free) is given in Kreisschreiben 36.
Search for:
"Gewerbsmässiger Wertschriftenhandel" https://www.estv.admin.ch/estv/de/ho...schreiben.html
"Commerce professionnel de titres" https://www.estv.admin.ch/estv/fr/ho...schreiben.html
"Commercio professionale di titoli" https://www.estv.admin.ch/estv/it/ho...schreiben.html
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  #14  
Old 24.06.2020, 12:55
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Re: Tax and Stocks

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I gonna move with my wife to Lausanne, she got a job there, but my main source of income, at least at the beginning, will be trading, options included, so I supposed I will be consider as professional investor even when I will not invested thousands.
You'd probably be much better off by using a separate company, GmbH (société à responsabilité limitée). Its seat can be a different location from your residence, you save (most) social insurance cost (at least 10%), and only half the dividend payouts count as income (if you own 10% or more).
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Old 25.06.2020, 00:39
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Re: Tax and Stocks

Thanks a lot for your thoughts lads, much appreciated in this uncertain times

Looking forward to experience the Swiss life style, tax on investment included

By the way, I realise the SMI has been showing a tremendous relative strength, specially compared with other European index, therefore, do you particularly thing is there any kind of overvaluation in the index or, does the index just reflects the momentum of the Swiss economy?
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Old 25.06.2020, 10:01
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Re: Tax and Stocks

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Thanks a lot for your thoughts lads, much appreciated in this uncertain times

Looking forward to experience the Swiss life style, tax on investment included

By the way, I realise the SMI has been showing a tremendous relative strength, specially compared with other European index, therefore, do you particularly thing is there any kind of overvaluation in the index or, does the index just reflects the momentum of the Swiss economy?
The Index reflects 3 shares, Nestle almost 20% Novartis & Roche at about 18% each, the next biggest is Zurich Insurance at just under 6% so very little reflection of the Swiss economy.
Nestle makes 98% of profits abroad, more profit in India than in Switzerland, then that should not be surprising as Switzerland has a small population.
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Old 25.06.2020, 10:28
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Re: Tax and Stocks

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Making 10 trades in a year is never a professional activity, even the laziest person should realise this.
someone should tell Terry Smith with his 'do nothing' principle
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Old 25.06.2020, 10:39
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Re: Tax and Stocks

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someone should tell Terry Smith with his 'do nothing' principle
However the fund has to match investments & redemptions, so trades in the companies held every day, about 60% of the companies get traded each month. For Swiss CGT, his holdings in FS would be tax free.
I am sure his move to Mauritius in 2017 will make his roughly £300 million profits from personal holdings in FS free of UK potential liability to CGT by 2022.
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Old 25.06.2020, 15:00
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Re: Tax and Stocks

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For Swiss CGT, his holdings in FS would be tax free.
Given that he's a fund manager I wouldn't be too sure about that.
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Old 25.06.2020, 16:05
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Re: Tax and Stocks

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Given that he's a fund manager I wouldn't be too sure about that.
Investing his own money on the same basis as everyone else? it's a moot point as he has not made any sales & unlikely to ever do so, his profit share of the management fund is more than he could ever spend.
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