Husband lent money to someone and got lucky

My husband’s work colleague dabbles in penny stocks and got lucky. My husband has lent him 100 CHF to also play with and now he got back 5000 CHF. He has already received this money. The problem is I have no clue where I have to put that in the tax declaration. Would you suggest a tax advisor for this small problem or just put it somewhere and write an explanation?

I have already talked to my husband to stop these things and hope he will.

Disclaimer: I am not a financial adviser.

This looks like capital gain to me, which is not taxable. The tax office would probably not even notice it if it is in your bank account among the rest of your money (5000 is not much).

Now, you might want to write to the tax office just to clarify.

Also, your husband’s colleague is probably going to have a bit of explanation to do with the FINMA and the tax office if he does that regularly. Investing others’ money is a regulated job and is taxed differently.

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Yes, the tax office is very helpful with such things. They will not give you any advice (there are tax advisors for this), but they will help you with how to correctly fill your tax return when you have to declare.

Disclaimer: I am not a tax advisor. But I did, on occasion, ask questions to the tax office on the correctness of the declaration and the tax office was very responsive and helpful.

No, you don’t want to write to anyone. Ignore it and they will never find out and never tax you. Transfers between swiss bank accounts are subject to bank secrecy and the tax man doesn’t have any privileged access.

Even if they do find out, it’s not a crime to have a little amnesia when it comes to tax returns here. For example, pretty much noone (except the completely gullible or if we’re talking serious amounts that can be detected) declares rental deposit accounts, cash in wallet, gold under mattress, bitcoins, etc.

Worst case they bill you for the difference in taxes owed plus a little extra, you pay, end of story.

Best case you get to keep all of it tax free

Bullshi*t. For capital gains OP needs to buy and sell an asset. There’s no asset involved here, or at least someone had the assets and might claim capital gains, but most definitely not OP. He had some kind of profit sharing agreement of sorts. This is 100% taxable income here and they will come for all of it if you tell them.

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Probably best not to declare it. 5000 CHF is not much anyway. Worst case just take it out in cash and buy groceries with it.

His colleague must declare it as his own profits somehow, since he most probably wasn’t allowed to gamble invest with other people’s money. The trades and profits he made are all in his name, and in his reports from the Broker.

As far as you are involved, it’s a gift from the colleague. Any follow up questions that arise from your declaration if you mention investing might cause him problems.

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Btw how would it be treated if the friend just gave me 5000 CHF as a gift, without any trading in the background? Just as a regular income or are gifts treated differently?

I have looked this up. This would be taxed at 12% where I live.

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Are there similar rules for gifts between mebers of family?

That is usually not taxed or taxed at a lower percentage. But it also depends how you are related.

As far as I know, all cantons have exemptions for gifts up to a certain amount. For example, in Bern, gifts up to 12,000 francs are not subject to gift tax (this exempltion only applies once per 5 years for multiple gifts from the same person). If you fill a tax return there is a form for inheritances and gifts. The gift would be 4900, and the remaining 100 would be a loan repayment, assuming your husband did not charge interest on the loan. You could make things simpler by entering the full 5000 as a gift and just sorting the 100-franc loan in the loans section.

I don’t imagine there is a way to write of the 4900 as a capital gain because if I understand correctly, the penny stocks were never your husband’s property. In any case this would be much more complex than writing it off as a gift.

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In that case the friend would have to declare the total income from penny stock trading as his, and then deduct the 5000 gift from his income. I assume this is allowed. It’s only logical: if you should pay tax on gift, then should the giver have to pay tax as well? that would be double taxation.

By the way, since we have wealth tax in Switzerland, I find it really mean for there to be a gift tax. The money just changes hands, why should the government put their greedy hands on this transaction? Edit: I guess it’s there to prevent tax fraud.

Because he knew it would be invested and he would get part of the profits, they form a société simple art. 530 CO. It is not a gift.

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Obviously to avoid a total avoidance of the inheritance tax (donate all your wealth while you’re alive, have your heirs provide for you until you die).

Most countries with inheritance or estate tax have a gift tax as well (but it’s still usually more favorable tax wise since there is often an exemption which can be repeated every x years).

Also this avoids issue with people trying to classify something as gift instead of income.

Nothing useful to add except to say that this sounds like one of the chance cards you pick up in the Game of Life or Monopoly. :laughing:

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Quite nice break down of gift and tax - https://www.credit-suisse.com/media/assets/private-banking/docs/ch/privatkunden/finanzplanung/erbrecht-steuertabelle-en.pdf

I understand you need to read this table as tax for receiver.
In Zurich receiving gift from spouse or children are tax free.
Receiving gift from parents is free up to 200k.
And all this can happen only once in a life time.
Could someone confirm if my understanding is right?

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Schwyz doesn’t levy either inheritance tax or gift tax.

I think it’s actually the other way around. Receiving from parents is free, receiving from your kids is only free up to 200k.

What about tax for/between spouses? Does it mean that after marriage assets need to be officially gifted/transferred between spouses? Somehow thought that once married all is common as family assets.

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