Choosing a tax advisor for a less typical situation

Taxes
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Hello Mustachians,

Long time lurker, on a B-permit, Deutschschweiz, wanting to FI and some time later RE.

Recently my compensation has grown a lot due to stock appreciation.
I want to sell a part of the stock and diversify, and I also want to get specific advice related to the part I’d keep. The stock is a mix of shares and options and I have some flexibility in terms of location/canton. So I read most of the documents that my current Steueramt has put out and now I think I should pay for more specialized tax advice.

The big four accounting firms are what first comes to mind. Do you have feedback about picking one of them? And do you have suggestions for other firms? I prefer a personal consultation and Zürich or Basel are fine for me if I need to visit just a couple of times.

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Maybe the first thing, are you sure you need help? Capital gain isn’t taxed, so afaik it would only be relevant for unvested grants and those are usually treated as income.

The tax office can also usually help answer questions.

Rules for income are pretty simple to assess (and there’s comparison website).

My understanding is that a competent tax advice will go in the many kCHF, so have to make sure it’s worth it.

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Thanks, all good points.

For me the hard part comes from the options part of the stock which is the big chunk. While not exercised they don’t count as wealth.

On the other hand with no capital gains tax, if one can exercise early, that minimizes taxes a lot. That is if the stock continues to appreciate. Also you have to put money in and pay wealth tax on the exercised stock.

Finally, if one can move to a low income tax Gemeinde, you can keep the options unexercised and avoid both the risk and the wealth tax until you want to liquidate.

As for the cost, I think low single digit kCHF will be worth it. I still haven’t got a reply from the ones I already wrote to but I think it will be around that. Not sure if I can negotiate the price down successfully and what to look for aside from the lowest price.

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You can check here for RSU/RSAs. If you can exercise the options already, they will be counted as income (see point 3.1 sentence 1 from the link above)

If you already received the options, and you currently live in a rather tax-unfriendly Gemeinde, you need to move before 31.12.2021.

I’m not sure if this is true, at least from what I read from the document I linked above. If you can exercise options anytime (meaning those are not RSU/RSAs), it will be counted as income. But I’m no tax advisor, just a random dude on the internet :wink:

Edit: it seems to depend on the canton… Here is the link for canton Zurich, where unrestricted options are counted towards your personal wealth and you have to pay wealth tax for it. Kantönligeist anyone?

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Thank you, FIREstarter,

I will definitely bring this up - so far I’ve seen general guidance that most options are taxed at exercise from at least 3 different online sources:

My company’s own internal tax guide also indicates tax only at and after exercise.

I notice that the last of the 3 articles above hints that any options that cannot be traded themselves on stock exchanges might be considered “blocked” and therefore not taxable before exercise. Not sure if that’s a thing though.

I’ll probably wait for the offers, reject any that don’t include a number, and pick one based on some combination of ease of communication and price. If someone is interested, I can update with my results here.

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Thanks a lot for the links! Especially the handbook from Indexventures is a really cool and comprehensive guide. I just scrolled through it quickly, but Switzerland is unfortunately not mentioned in the handbook.
The 3rd link references Euromoney Institutional Investor PLC, which is listed on London stock exchange (see here and here). At first glance, it doesn’t look like a fishy company.

I don’t know if your employer is an international company, but if it’s a Swiss company, why not try a tax advisor instead? You can also request information about prices from different tax advisors, and it might be cheaper than the big 4.

I’m definitely interested in your results, even though it’s not (yet) an option for me. But it might become an option in the future, if I want to hire employees and can offer them a good package (salary + stock options).

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Pay for dbo. Great company and worth the money if your stash is above 100k

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Some updates from me:

Pay for dbo. Great company and worth the money if your stash is above 100k

I think you mean BDO? A colleague in another country got quoted 5 figures for advice on a similar situation. If my tax advice budget grows that much, I’d rather go with the Big 4.

I started with a one-time consultation with a local tax advisor, who didn’t know the answers on any of my questions immediately, but who was very friendly and nice to talk to.
He got back to me, confirming some of the things I said above (which in retrospect were not very well understood assumptions).

  • No wealth tax on my unexercised options.
  • One can move a tax-advantaged location in late December, exercise everything vested to them on the next day, then pay the whole (significantly lower) tax bill to that tax-advantaged location.

My impression is that if I want to get deeper into tax minimization options, I will need to focus on companies of the sort of BDO and the Big 4.

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Big 4 won’t accept you if you are too small. At least, they will tell you and redirect you to another firm.

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I’m not sure Big4 are that great, at least I’ve mostly heard anti-recommendation from coworkers (one of the big4 taxes care of taxes for people transferring between location).

Maybe it’s not as bad if you don’t have to deal with multiple countries though, or if you pay extra money for specific service.

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The way I see it, you’re more likely to get proper attention (to your needs and detail) from a small/er advisor than the Big 4.
Being “big” doesn’t automatically make them good for every purpose.

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Thanks for the engagement, everyone!

Big 4 won’t accept you if you are too small. At least, they will tell you and redirect you to another firm.

My experience was actually different. 3 out of 4 were very eager to “accept” my case. All their offers were rather unmustachian though.

The way I see it, you’re more likely to get proper attention (to your needs and detail) from a small/er advisor than the Big 4.
Being “big” doesn’t automatically make them good for every purpose.

True in general, but when it comes to “less typical situations”, the Big 4 would be the safer (although fairly more expensive) choice.

Having said that, I’m very much open to tax advisor recommendations.

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When I was transferred to CH and also another 2 years that I work abroad with Swiss contract one of the Big 4 did my taxes.
I didn’t only to collect the documents I had to fill the data in a way that they like it. (a lot of hours…)
They didn’t optimize unless you mention to them

So a small tax advisor has been given better results and experience to me, but I have simple tax declarations

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Hi, What are your specific questions? From what you describe I do not think your situation is so out of the norm as there are a lot of folks working for international companies in CH having options and RSUs.

@firestarter covered it well. In general options should be taxed as income when granted and added to wealth. For RSUs when they vest. If you want to optimise tax by moving cantons then look at the usual suspects with lowest income and wealth tax rates: Zug, Schwyz, Nidwalden etc. You can use Comparis tax calculator to narrow your search. Remember it is the canton where you reside at Dec 31 that counts

I have been through a similar search process and never yet found any one stop tax optimisation service for mortals. If you are a high NW customer (>5 M CHF min) then an account at a Private Bank probably opens doors but you pay for it.

For the rest of us in my opinion it makes more sense to spend our own time to inform ourselves. Someone already suggested to contact your tax office, their advice is “free” and in my experience they are usually very friendly and helpful. Just try to ask a specific question with respect so for example if you want to know if your canton taxes unexercised options differently vs. what I wrote above call and ask the treatment “eg I have xM options I would like someone advise me how will they be taxed” and not “how can I optimise my tax bill”

I was offered big 4 tax advice following end of employment and separation payment and my experience was similar to @broth . I was given a junior associate and the advice provided was to estimate my tax bill for the year which I had already done myself via Comparis. When I asked about how to optimise the bill e.g. 2nd pillar, moving cantons, marriage they were unable to help. I found a solution myself (pay into my wife’s 2nd pillar). I suspect I would have needed a Director at least - but then you might be looking at daily rates of 2000 CHF+ , that’s assuming they even get out of bed for you…

Another option could be to try a local fiduciaire (think it is Treuhander in German) and ask them if they have experience of tax declarations for options.

hope it helps

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Just to add on the daily rates: forget about 2000+ for Director level. We are talking 500-750 CHF per hour for one of the big 4 (from my own experience - so those are actual prices)

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Thanks for the correction - indeed I was probably thinking about big 4 daily rates for 2-3 months steady contract work. Ad-hoc advisory work will for sure be a lot more expensive like you outline.

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Hi, What are your specific questions? From what you describe I do not think your situation is so out of the norm as there are a lot of folks working for international companies in CH having options and RSUs.

The are a couple of details making my situation less typical, that I didn’t want to bother the forum with - for example, my employer not having a Swiss entity. This is why my intent was to mostly ask here “How to choose an advisor?”, not necessarily “How to tax-optimize my specific situation which is ”.

In general options should be taxed as income when granted and added to wealth.

That’s the opposite of what my current tax advisor told me - that vested but unexercised options are not subject to wealth tax. I will look further into that.

For the rest of us in my opinion it makes more sense to spend our own time to inform ourselves.

Totally agreed.
Unfortunately while you do get a fairly good idea of how things should work in general from various articles or forum links, if you can’t read and interpret the corresponding Steuerpraxis in Deutsch (for the cantons relevant to me) - and I can’t - it’s probably a good idea to get a tax advisor to answer all your questions. And my personal preference is to not share my interpretation first, just to be sure not to bias them, so it’s a full-blown engagement then. That’s just how I look at it, of course.

Someone already suggested to contact your tax office, their advice is “free” and in my experience they are usually very friendly and helpful

They have been outstandingly helpful and friendly in my case. They however did not feel very qualified to answer the first 1-2 detailed questions I had, so I did not feel very comfortable continuing to target my questions to them instead of someone that is paid to research and find the answers.

Another option could be to try a local fiduciaire (think it is Treuhander in German) and ask them if they have experience of tax declarations for options.

Awesome, thank you, I will look into that.

I suspect I would have needed a Director at least - but then you might be looking at daily rates of 2000 CHF+ , that’s assuming they even get out of bed for you…

We are talking 500-750 CHF per hour for one of the big 4 (from my own experience - so those are actual prices)

My data points were 2200 EUR w/o VAT for 30 min conversation with a Sr Manager and a Manager, where I mostly describe my situation and ask my questions, and then they research it and email back a response to me. Alternatively 900 CHF w/o VAT for a one-shot discussion with an unspecified “Swiss team”, which I suspected to be exactly what you described - a couple of junior associates who won’t be sending back a written (and therefore legally significant) advice - which is why I declined it too.

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If I buy stock options in a brokerage account, their value is part of my taxable fortune. It is the same for options given to me by my employer, once they are fully vested they are mine and part of my fortune.

It may depend by canton. I live in Geneva. I believe some cantons may not have wealth tax.

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Options given by employer work differently. https://pestalozzilaw.com/en/news/legal-insights/taxation-employee-equity-incentives-switzerland/ has a bit of an overview (depends if it’s genuine or non-genuine employee participation).

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I humbly eat my hat! Apologies.