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Old 04.10.2021, 20:27
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Cryptocurrencies - capital gains in Switzerland

What's your take on that one? I don't seem to find any information about it especially in the context of cryptocurrencies.

Capital gains are tax-free in Switzerland as long as you are not considered a professional investor. It means It one is not living from his investments and is simply using the stock market to earn more money.

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1. You hold securities for at least 6 months before you sell them.

2. The transaction volume of all of your securities trades combined (total spent on purchases and total earned on sales) is not higher than 5 times the total value of your securities at the start of a tax year.

3. Capital gains generated through securities trading do not account for a significant portion of your basic income. The rule of thumb: Capital gains should account for less than 50 percent of your net income.

4. You use your own assets to finance the purchase of securities. Or: Taxable returns like interest and dividends are higher than interest owed on loans.

5. If you invest using derivatives – and options in particular – these can only be used to hedge your own securities.
I'm sure many crypto investors were positively surprised this year and maybe managed to sell some positions with huge returns. I wonder what the situation would be like if an average expat, employed somewhere in a corporate world, earning the EF minimum poverty salary invested 40-50% of it in crypto and one day woke up to a 50x increase of his portfolio. As I understand, the investor wouldn’t meet the second and the third rule, therefore would be considered a professional trader, or wouldn’t?

What would you do if you were that person? Would you sell everything to fiat and accept that you need to pay taxes? Would you trade to a stable coin believing that it will be stable forever and sell within certain limits?

There was a thread here some time ago about a Swiss guy who became a millionaire by investing in DOGE, he would buy a house, but forgot that a finanzamt could show up at his door. Does anyone know what was the ending?
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Old 04.10.2021, 20:44
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Re: Cryptocurrencies - capital gains in Switzerland

Only one way to find out … please cash it all out and let us know how it worked out.
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Old 04.10.2021, 21:00
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Re: Cryptocurrencies - capital gains in Switzerland

asking for a friend
...just wondering what my options would be if fortune smiled on me in some years. I haven't been hodling them too long for now.
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Old 04.10.2021, 23:34
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Re: Cryptocurrencies - capital gains in Switzerland

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It means It one is not living from his investments and is simply using the stock market to earn more money.
No I think it went to behavior - more than 10 transactions a month and you are a professional and hence it is income.
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Old 05.10.2021, 07:19
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Re: Cryptocurrencies - capital gains in Switzerland

Cryptocurrency is just another financial asset class for tax purposes. Be sure to track any holdings on the asset listing tax form (Wertschriftenverzeichnis) showing any purchases and/or sales during the year. If the taxpayer is actively trading it and/or other financial assets, the taxpayer could possibly be considered a professional trader rather than an investor, according to the tax office's criteria.
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Old 05.10.2021, 08:51
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Re: Cryptocurrencies - capital gains in Switzerland

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What would you do if you were that person? Would you sell everything to fiat and accept that you need to pay taxes? Would you trade to a stable coin believing that it will be stable forever and sell within certain limits?
I would split it:
* keep a part in cryptocurrencies (on different exchanges) + stablecoins (assuming you still want to be part of the crypto world)
* for daily expenses, I would transfer a good chunk to an exchange platform like crypto.com, exchange it there to fiat (EUR), and use the physical & virtual cards provided by the exchange; this is also possible with Revolut
* the rest of it (if something remains) would be transferred to bank account
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Old 05.10.2021, 10:07
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Re: Cryptocurrencies - capital gains in Switzerland

I made a fair bit last year on crypto, my accountant told me that you can be classed as a professional but it doesn’t depend on how many transactions you make if the amount is under 250,000 of income. She recommended I just declare it and they decide on the amount, I did this and was pleasantly surprised at approximately 2% going to the taxman overall (including gains from equities).
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Old 05.10.2021, 11:24
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Re: Cryptocurrencies - capital gains in Switzerland

This was my follow-up question - how much tax one would expect if classified as a professional trader. After cashing out I would definitely not keep it in bank but rather further invest in VOO or similar...would be useful to know how much to spare for taxes.
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Old 05.10.2021, 12:12
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Re: Cryptocurrencies - capital gains in Switzerland

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This was my follow-up question - how much tax one would expect if classified as a professional trader. After cashing out I would definitely not keep it in bank but rather further invest in VOO or similar...would be useful to know how much to spare for taxes.
Maybe close to 30%
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Old 05.10.2021, 12:17
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Re: Cryptocurrencies - capital gains in Switzerland

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Old 05.10.2021, 14:32
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Re: Cryptocurrencies - capital gains in Switzerland

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Maybe close to 30%
If so, it might be a good consideration to move to a different canton, the rate varies wildly it seems…
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Old 05.10.2021, 15:33
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Re: Cryptocurrencies - capital gains in Switzerland

Would you have any reference? I don't even know what I should be looking for and looking for capital gains I find that in general they are tax-free "but".
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Old 05.10.2021, 15:44
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Re: Cryptocurrencies - capital gains in Switzerland

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Would you have any reference? I don't even know what I should be looking for and looking for capital gains I find that in general they are tax-free "but".
If you are seen as a private investor there’s nothing to worry about, but …
https://ajooda.ch/en/capital-gains-tax-switzerland/

I still have a feeling that you should be fine with few thousands unless you execute transactions with gains 100k or higher. In which case, lower tax cantons are definitely way to go.

Let’s put it this way, if you make more than enough you should give me half of it.
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Old 05.10.2021, 20:59
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Re: Cryptocurrencies - capital gains in Switzerland

Super helpful! Thank you @jacek
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Old 05.10.2021, 22:28
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Re: Cryptocurrencies - capital gains in Switzerland

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If you are seen as a private investor there’s nothing to worry about, but …
https://ajooda.ch/en/capital-gains-tax-switzerland/

I still have a feeling that you should be fine with few thousands unless you execute transactions with gains 100k or higher. In which case, lower tax cantons are definitely way to go.

Let’s put it this way, if you make more than enough you should give me half of it.
I’d agree with this (except giving him half - that could go to me) some lower tax cantons are Nidwalden, Schwyz and Zug
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Old 07.10.2021, 11:26
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Re: Cryptocurrencies - capital gains in Switzerland

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No I think it went to behavior - more than 10 transactions a month and you are a professional and hence it is income.
10 txns in one instrument or 10 in total for portfolio ?

if later, it sounds rather small no ?
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