I know that accumulating ETFs are taxed as if they were paying dividends/coupons, but what about zero coupon bonds? Are these taxed as capital gains and therefore are tax free?
I am looking into buying zero coupon EUR bonds.
Here you’ll find the tax regulations for complex financial instruments, and here you can check individual securities for their specific tax values.
In short: If the income is predominantly one-time you’ll be fully taxed on it. Zerobonds are not interesting for a private Swiss investor.
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I’ve tried to read the document (used Google translate because I don’t speak german), so probably I didn’t got everything from the document.
As far I understand, what matters it’s the return at emission. If most of the income is predominantly from interest when the bond is issued, then even if you buy it now you won’t be fully taxed, but just on dividends. So If buy some bonds that currently pay a lot at maturation date, but it wasn’t the case when they were emitted, I should get taxed just on interests, right?
In general I’d like to know if buying bonds (and not bonds ETF!) it’s a good strategy if I have a fixed date in the future (around 4 years) where I want my money available in cash, or I should consider something else.
I entered a t-bill on the ictax site that was left till maturity, im not sure how to interpret the info in the link, does it mean theres no income tax due since interest was zero?
https://www.ictax.admin.ch/extern/en.html#/security/US912797FN27/20231231
Interest was not zero in USD
The IUP taxation applies. However, they take into account the FX rate CHF/USD at issuance and redemption. In your example, it leads to a loss than can be compensated only the same fiscal year against other IUP income
T BILL taxation is simple in my view.
Income = Redemption price (or sale price) - Purchase price
Most likely in CHF terms it was a loss.
It’s a different thing and calculation for T-Bonds but most likely you know.
Hello everyone,
I would appreciate some clarification on the tax implications of investing in corporate bonds as a private investor. Specifically, I am interested in understanding how I would be taxed if I were to purchase an AMZN Corp 5.2 Dec03’25 bond at a price of 100.156 USD and hold it until maturity.
As I understand it, by investing 1001.56 USD in this bond today, I would receive 104 USD in coupons (paid semi-annually in June and December), and on December 3, 2025, I would receive 1000 USD back. This would result in a total of 104 USD in coupons and a net profit/loss of -1.56 USD. Am I correct in my understanding so far?
Regarding taxes, would I need to declare the 104 USD received from the coupons as part of my regular income?
I have also heard that it may be advantageous to invest in corporate bonds with low coupons but trading at discounted prices, especially here in Switzerland where we are not taxed on capital gains. Can anyone confirm if this is accurate? Additionally, if one were to invest in zero-coupon bonds, could they be considered as professional investors?
Thank you for your insights and assistance.
Detailed regulation Here
Based on my understanding, following should apply
For normal bonds, you should also consider the “accrued interest “ that you would need to pay to the original investor. This would be deducted from coupon payments. In IBKR it referred as “purchase accrued interest” If you bought the bond on the date of issue, then such interest wouldn’t be due.
Read here Accrued interest
So net taxable income will be = ( Coupon payments - Purchase accrued interest ) + Emission discount
Emission discount = Redemption value (100 USD) - Issue price (for example 99.90 USD)
Emission discount adder is only applicable if bond is held till maturity
You can simulate on ictax
For Zero coupon bonds- the capital gains is taxed as normal income in Switzerland. So I think you wouldn’t be able to take advantage of what you are thinking to do.
Taxable income = Sell price (or redemption price) - Buy price
It is not correct.
In Switzerland, the accrued interest at sale or purchase are part of the sale proceeds/purchase price —> non taxable gain or non deductible loss.
The accrued interest do not reduce the coupon payment.
correct (I understand that the bond was issued at 100%). The accrued interest at purchase/sale will be part of your capital loss in USD.
Interesting. Thanks for sharing this info about “purchase accrued interest”
I declared that way my tax return for 2 years in a row. First year is already finalized.
Second year is pending , so I will see
I don’t understand why should investor pay tax on coupon payments they don’t actually receive ?
No, one does actually receive it, and that’s the whole point. See for example money market funds thread.
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Could you please build an example with the tax part?
So, in Switzerland you dont pay taxes on Capital Gains, but in this case you would pay taxes (like the taxes we pay for our salary) for the taxable income? Or the taxes you pay on this are like the 35% you pay on interest generated by deposits?
Another element I read here with the help of the translator is that if you buy corporate bonds issued by Swiss company you will pay 35% on the money you generate with coupons and capital gain. But if you do the same with foreign corporate bond, you dont pay anything?
35% is just a preliminary/provisional tax at source for Swiss securities. Swiss residents get a credit for it at the time of tax return. It is not the final tax. Final tax is calculated based on individual tax return.
By the way, @Guillaume_GVA pointed out that formula for taxable income shouldn’t account for Purchased accrued interest as this logic is not applicable for CH residents. So please be aware of that. I think it’s best to report these securities directly in tax return softwares where applicable tax is automatically calculated
Taxable income for Regular bonds = coupon payment + emission discount
For foreign bonds - you pay tax as well. It might be that there is no provisional tax deducted at source. But it doesn’t mean there is no tax.
Thanks @Abs_max ! this means that the capital gains+cupons from Corporate bonds are taxed like regular salary correct?
Yes Switzerland only has one personal income tax rate regardless of the source.
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But when you for example sell your stock of Nvidia and get a capital gain of 200’000 USD you dont pay taxes for those or as well it applies income tax?
Capital gains for bonds is not same as stocks. So the taxation is as per the literature I sent.
But whatever the final number is, it becomes part of income like salary
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