I am looking at the official criteria from Swiss Tax authority (translated by deepl)
The holding period of the securities sold is at least 6 months.
The transaction volume (corresponds to the sum of all purchase prices and sales proceeds) per calendar year does not exceed a total of five times the securities and credit balance at the beginning of the tax period.
The realization of capital gains from securities transactions does not constitute a necessity to replace missing or eliminated income for living expenses. This is usually the case if the realized capital gains amount to less than 50% of the net income in the tax period.
The investments are not leveraged or the taxable investment income from the securities (such as interest, dividends, etc.) is greater than the proportionate interest on debt.
The purchase and sale of derivatives (in particular options) is limited to hedging own securities positions.
If these criteria are not cumulatively met, professional securities trading cannot be ruled out. The corresponding assessment is made on the basis of all circumstances of the specific individual case (cf. no. 4).
My understanding is that you have to declare the open stock/ETF positions as of the 12/31. This what I have declared my last two years of tax returns (Basel Land) here in CH.
Yes, but since you’re also taxed on the income raised through dividends, I think it makes sense to also enter the details about the buys / sells you’ve made, especially if you bought much towards the end of the year.
I’m not speaking from experience, but I’d think that if you only list the holdings as of 12/31, the tax authority could assume you’ve been holding all that for the entire year and collected dividends on every single payout.
In all Tax programs (easytax, baltax) that I know it “leads” you through the fields including when you bought and how many.
And dividends are certainly a taxable and declarable income, if you omit it’s false declaration.
That said, you can get away with it for many years I’m sure, it’s difficult to find out as banks normally only give a EOY statement. And I’ve only ever been asked to, as a random spot-check, submit an statement of a dividend payout I declared, not prove that I didn’t actually get a dividend I didn’t declare
I suppose if you increase your wealth a lot by day-trading, that will ring alarm bells.
I clarified with my tax advisor recently and specifically asked if I need to report all transactions.
He said I only need to submit the EOY report with balances, dividends, and costs. On occasion the tax office might ask details about the dividends but typically this does not happen, he added. This is in ZG and my dividends are not significant so that’s probably why.
Depending on the dividend report’s contents, there might be enough info already. I also checked the tax form instructions for ZG and in their example for the form VW they only list the positions of the stocks, not the transactions. There are begin and end dates for other types of securities like open/close dates of accounts and I think entry/exit from funds.
Ok thank you, that’s good to know. I have only started out investing last year and only held a single (small) position and found the most straight-forward way of entering is just declaring my 2 buys over the year into the tax program which took care of correctly calculating the dividends I had earned (not even enough to fill out any reclamation forms ).
I traded with quite a bit of margin loans this year during the recovery period (not anymore though). Am hopeful not to get hit by the professional trader status, giving that most of the earnings remain unrealized. As far as I understand it, only the year I realize my earnings will be critical for the assessment.
I recently made a high profit on a stock in just a few weeks.
What should I do, regarding the Swiss law, is it risky to sell the stock before the 6 months?
Because in that case I would be considered as professional trader by the administration?
Could we maybe make a dedicated thread on the professional trader status ? If anyone asks that same question each time they sell a piece of security we are not out of the woods…
You have to ask yourself how does your profit compares to your usual revenues, did you make a 5 k profit but earn 100 k a year ? then you are not going to be tagged as such because of a single transaction. Did you make a 1 million profit trading options on the recent $GME trade then you might be a candidate for that price.
That being said, you are not required to disclose any single trade you did while filling in your tax return, only the dividends and the state of your portfolio at the end of the year are required. If there is a discrepancy between your wealth at the end of the previous year and your wealth at the end of the current year and that discrepancy cannot be explained with your declared income the tax authority will ask you to justify and that’s when you may be flagged as a pro trader in case this increase results from a massive trading gain.
Another interesting source on that topic : link , point 3 of that document describes the usual process to become pro trader, in line with what’s above.
No worries. To be honest after reading so many posts on that topic on the forum I started doing some research on the issue (you find a lot when looking for “gewerbsmässiger wertschriftenhändler” on google. I’ve been filling taxes in ZH for the past 15 years and the year we bought a flat we had a 500k turnover on our portfolio and some of those positions we had hold for less than 6 months. This did not triggered any red flag. I also do some options for fun, without much success I must say and that never triggered any audit of my taxes.
Reading the reports from the kantonal / federal courts on the matter you see that the amounts involved are massive, in the range of several 100 of thousands of profits in a year. To be honest I guess only a handful of people can be affected by this…
We‘ve had that discussion regarding the professional trader status over and over again (though it‘s somewhat scattered around the forum). I‘ve recently quoted criteria from the ESTV Kreisschreiben. By holding „a lot“ of Vanguard Funds and living off of them, you’d clearly breach one of those. But it’s a formal fallacy to think this alone would make y a professional trader.
I get your points, not sure what happens if you start selling and live on it and what the tax office thinks of it. And laws can change, I stick to distributing.
The tax office is going to make no distinction between VWRL and VWRA - or accumulating and distributing funds in general - from a tax perspective. To the contrary, the tax admin put considerable effort and into making sure accumulating and distributing funds are taxed the same.
An accumulating ETF‘s (retained) income is taxed as your personal income, even though you as the investor don’t receive a payment but only see a capital gain in your account statement.
All that I know. I’m talking exclusively about the RE phase and what happens then. Higher costs for selling then for sure, you might make it up with automated reivestment during the acummalating phase of your wealth…
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