Hi there. Does anyone have experience of being Swiss retail investor and trading options?
Specifically Covered Calls frequent selling. How do authorities treat CCs trading in Switzerland?
If someone sells covered calls every week on their long-term 4-5 positions, all the time + repeat, really big numbers in total annual premiums (plus leveraged debt) - will they classify this as income to be taxed and force you to become professional investor?
Check out my post on the tax authorities judging things generally (here) or search the forum?
Thank you!
This is interesting regarding sold puts, as they are surely not a hedging tool and I stopped using them in fear of being called out.
However I still can’t find anything about covered calls specifically. Like hundreds of them on my 4 long positions, ever week + repeat + leverge debt.
The problem is, I can see many different opinions online as if options premium income in general is treated as “income” or as “capital gains” (many opinions both ways for Switzerland specifically).
Ps. In my experience you can trade how much you want, they don’t care (stocks). I.e. sell dozens of times per year.
Yeah, I don’t think you’ll get the specific answer you’re looking for unless the Steuerkommissär will actually take a look at your returns and calls your options trading into question.
As mentioned in the other thread, this is apparently not triggered by a single violation, but by looking at your whole situation.
If you’re in doubt and want to make sure, I would check with the tax office in advance. You can of course also just gamble. My “light” gamble variant is to gamble (on options trading) but not have many trades on my books at the end of the tax year (and to not violate any of the other rules). A “heavier” gamble variant would be to just continue trading and hope to not be called out. Be prepared to explain yourself if or when you are called out, as Unwissen schützt nicht vor Strafe as we say in German (and as the law applies AFAIK).
Purely personal opinion: just because you got away with violations so far, I wouldn’t conclude that this is prejudice for getting away with it going forward.
Anyway, good luck.
Do you have a day job? Does this income represent the majority of your income? If no to either, I wouldn’t worry (and even if yes, I probably wouldn’t worry, they usually really don’t want to allow you to deduct your trading losses).
Yep, got it and I agree fully.
The problem is, lets say a covered call - can be totally treated as capital gains + hedging tool if you explain it and have a plan and isn’t at the same time..
I also have self-employment business that generates revenue any given year, but can as well stop and not generate revenue etc. etc.. There is many angles to look at those famous “5 rules”
Doesn’t seem like it would be a matter of opinion.
Gemäss Rechtsprechung des Bundesgerichts sind Gewinne aus Termingeschäften steuerlich gleich zu behandeln wie solche aus Kassageschäften und stellen deshalb Kapitalgewinne dar. Soweit Kapitalgewinne durch das Gesetz nicht ausdrücklich erfasst werden, bleiben solche aus Termingeschäften (Futures) und Optionsgeschäften sowohl beim Bund (Art. 16 Abs. 3 DBG) als auch in den Kantonen und Gemeinden (Art. 7 Abs. 4 Bst. b StHG) für die Belange des Privatvermögens steuerfrei. Entsprechende Verluste im Privatvermögen sind dafür auch nicht abzugsfähig.
I am self-employed, but for example this year is weak and income from this activity is very weak (last years were great). But the options trading and the amount of money I am managing in portfolios started to waay overcome any business income, plus it is totally scalable. So I am affraid, they will look at that sooner or later.. You seem very confident that they don’t want me to deduct losses - why?
Because many people doing active trading end up losing money, so it’s not a good deal for the tax authorities 
Given you’re self employed, it does seem riskier for you though (the examples I know of are mostly of people having salaried income as well).
Well, I try to think like I was them. If they have an individual that aggressively grows his account every year (so the problem here is not in losing haha), they probably wonder, especially when huge numbers start to kick in - where to put their hands on and tax something additionally.
At least this would be my home country authorities thinking for sure
Thank you 100x my friend! 
This helps a lot. At least I can throw them this if / when they come for my moneeeeh 
Note that it’s only for the case where this is wealth management. (If it’s classified as professional trading obviously this capital gain is taxed)
(so the question isn’t how options are taxed but whether this is professional trading or not)
Yep, exactly. It would be great to actually chat with somebody, who got classified as one. Do you know anyone who got classified? 
And for example, if you can come back to being retail if you change strategy?
It’s an urban legend, to scare small investors like us at night
Actually one of the initial jurisprudence is scary enough: DFR - BGer 2C_868/2008
That’s from before circular 36.
Afaiu, it’s a couple of retired people, they weren’t trading themselves but it was delegated to some advisor, they ended up being classified as pro on their 700k gains (out of 3.5M wealth).
Indeed.You have several exotic jurisprudences: A guy who sells his wine collection, one who sold posters, a farmer or a professional piano player who got classified as professional trader.
I’ve been working for almost 20 years in tax firms and banks in Switzerland and I’ve never seen one.
Hmm.. that is interesting (that you haven’t seen one for 20 years). But somehow I have very hard time imagine I am retired in CH both with my wife, I generate regurarily 100k chf monthly from my wealth through options and officials say: Naaah.. still retail. You can live like that sir and pay no taxes on anything (besides fortune tax), just use our beautiful country as you wish
But if that’s the case, then CH is really a tax heaven, as they have been saying..
Not sure there’s official statistics, but heard unofficially a handful (or less) of people in Kt ZH might be classified as pro.
100k monthly with no other income is likely to be one of those cases, tho if you actually make 1.2M this way you should probably get actual advice (and likely structure it as an actual company)
There was a story in the newspapers recently of a guy who was taxed as professional investor… after his dead. The heirs lost several court instances.
It is a jungle out there. Every Kanton, every taxman can decide differently. The only common ground is Kreisschreiben 36, and even there are some points that may need interpretation. (like “living off investments”, when realized gains are reinvested).
If you make much money over several years with derivatives you probably will be taxed as professional.
Calling the courts may be a very bad idea. More cases against tax authorities are lost than statistically explainable. You pay for both sites and worse, the judge is paid by tax money too. I think I would just leave Switzerland, I spend only a few months per year here. It is a losing game, everybody loses. I would pay more to the U.S.A in withholding tax in a tax free country and Switzerland loses my tax.
I have nothing against a capital gains tax; but not a subjective one depending if the tax sultan likes your nose. And social security on capital gains is a joke, except you really are a professional. Being a professional should mean managing money for clients too!
Agree 100% on everything. The not knowing part in CH while growing your fortune is devastating.
From what you say I can already see the sneakiness of CH authorities, when setting up rules like that.
So this begs the question of setting up offshore entities. Do you guys know if it can be done, when you previously reported tax with your wealth in CH?
For example by changing a canton and putting wealth into abroad entity. So you appear as chairman of that entity, that has paid out dividends from the entity as income (and the rest of the wealth stays in that abroad entity) but your private wealth disappears in the options-stocks part, lets say, while crypto, Real Estate stays as private for example..