Capital gains tax and professional investor status

I understand that capital gains in Switzerland are tax free providing the authorities do not determine you are a “professional investor”. According to there are 5 criteria to meet, one of which is:

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.

It seems that this rule could be easy to break if one funds FI by selling parts of an ETF portfolio. Does anyone have experience with this rule? Is it rigorously enforced or will the authorities look at someone in such a situation and decide that slowly selling assets isn’t a professional trader, at least in spirit?

It seems that this rule could be easy to break if one funds FI by selling parts of an ETF portfolio.

That would imply an unsustainable >4% withdrawal rate

Is it rigorously enforced

No, enforcement is fairly rare. From what I hear they’re targetting more options and day traders rather than buy&hold crowd


Surely this depends on the size of the pot? If one had a pot of 2M CHF a 4% withdrawal rate is 80k CHF/year. Depending on how much additional income one has from dividends etc the capital gains could comprise > 50% income. Or is there something fundamental I’m missing here?

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What you’re missing is that the typical dividend yield is 2% per year, and you will pay tax on it. So additional 2% from sales will not be enough to trigger that rule.

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No, on the size of dividends. They are about 2% now, if this makes up less than 50% of your yearly income+gains, it would imply you made another 2+% by selling stocks, or over 4% withdrawal in total.

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Just one thing as an afterthought: im pretty sure the 4% rule applies to the initial savings at reaching FIRE. So I can imagine that when the markets shrink by 50%, then 4% might not be enough, so you need to sell more.

Otherwise i could tell you that each year you can withdraw 99% of what you have left, and youre mathematically guaranteed never to run out of money :wink:

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Got it. I suspected dividends would play into this but I’m still trying to figure much of this stuff out.

Yes, obviously :wink:

Putting the withdrawal rate and proportion of dividends to capital gains aside (different topic).

Does anyone have a secure source whether early retirees would be treated as pro traders if capital gains are 50% of their income?

In comparaison to other countries, Swiss tax laws can be interpreted. Depending of the case, canton, tax office employee, a closed/similar situation could result of two different treatments.

Based on the custom until now, the likelyhood that a retire only selling ETF on a regular basis (non linked to the market condition) would be considered as a pro trader is low. If you have a legal insurance, you can always dispute the tax administration decision in court.

So, unfortunately, no secured source.


Than you for your summary of the Swiss approach. However, since it could have a 20-40% impact, its still a huge uncertainty for early retirees.

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Hey everyone! New member, long-term lurker (registered to ask exactly about this, smart forum function guided me here before posting…)

Regarding the question if somebody who is retired might face professional trader tax status and therefore be taxed on capital gains: I also read the relevant guidelines (Kreisschreiben 36) as such that living off your principal is an indication, but in no way would trigger that tax status.

Does anyone have any practical first/second-hand experience on this? Has anyone ever heard details of any professional trader ruling at all? Seems to be extremely rare to find anyone with that status in general…


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I know one guy who’s algorithmic options trader and he got the status.

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