Declaration of option trading in tax form

Hi,

this is my first year in Switzerland, canton of Zug. Could you please tell me how to declare profit from option trading in the Swiss tax statement? Is there already a guide for this? I could not find further information.

I have found ICTax - Income & Capital Taxes , but there I do not find the options.
I have traded some ETF, Index, Stock, Future Option with IBKR and made a profit < 10000CHF this year.

Kind regards
Victor

Hi Victor and welcome!

Generally, capital gains are tax free for individual investors managing their wealth.

But somebody who trades options heavily and makes a lot of profit could be classified as a professional trader by the authorities, which makes capital gains taxable as income. Not trading derivatives (except for hedging against risk) is one of the criteria to be on the safe side.

Another criterion is that you did not close your positions sooner than 6 months, that your trading volume is less than five times your initial wealth at the start of the year, that capital gains are not your primary source of income and that you don’t invest borrowed money.

For people who break one of the criteria, it’s not easy to tell though because there is some tolerance. You’re just outside of the safe zone guaranteeing you that you won’t be classified as a trader.

There has been a lot of discussions on the forum on this topic and the practice can vary between cantons. I’d think of consulting with a tax advisor given the high amount in order to declare it correctly, it’s probably safer? Another option would be to ask the tax office for making a call regarding your professional trader (or not) status, but I’m not sure it’s advisable without help from a tax advisor.

Hey @victorf!

Welcome!

Pretty sure you’d have to declare any derivatives’ trading profit as income in any canton (surely as a professional trader, most likely as well as a non professional trader), but tacticts (that of course I have only heard of from other people second hand) are to reduce the obligations over the year end and get away with a few (count on one hand) open options by year end statement.

I think that this is because ICTax is for the purpose of federal income tax. There is no wealth tax at the federal level, and there is no income (dividends, interests) from options, only capital gains, so options are a cantonal thing irrelevant to ICTax. (But I’m not an expert so that’s only how I understand it).

Do not listen what Your Full Name wrote, it is not correct.

ProvidentRetriever provided you with the correct information.

In conclusion, there are no clear answers. It’s the resultat of a case by case analysis.
However, the status of professional trader is not granted so easily by the tax authorities. It’s a myth on this forum :slight_smile:

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Thanks a lot!

For ETFs I found very detailed information on this website and thought maybe I can also find how to declare profit/loss from options.

I will declare the tax statement on my own for 2023. I have no open options positions, all positions expired worthless.

I understand with some option trades, I might still be classified a private trader and don’t pay tax on the gains :slight_smile: . Thanks also for explaining the difference of cantonal tax and ICTax !

Money made from option trading is treated as a form of capital gains (see this document, in German). Which means tax-free for non-professional traders.

Personally I avoid having open options at the end of the year, as I was unsure how the value of them should be listed as part of the ‘Vermögensverzeichnis’, and maybe to avoid waking sleeping dogs… So as long as you are not formally declared as professional trader, no need to split out profits from option trading: List a) all wealth including open positions at the end of year and b) all dividend / interest income during that year.

If you are in doubt, check with the tax office!

Thanks for linking this!

I’ve been looking for such guidance since I started selling options, but I only found a dated one for Basel which claims that option premiums should be treated as income.

Now I feel a little better holding options over the turn of the year.