I was fully invested until September 1987, Orange trees and the weather in Spain saved my ass, but this is off topic.
But I was fully invested 2000, 2008 and a few more bear markets. I think I count 8 bear markets where I was fully invested in 7 of it and in the last 4 I did add on margin. 3 times I was very lucky with the timing, one time I was too early and had to suffer a bit… just to make more money after.
I always wonder what all the newbies will do when a real crash happens; Trump does not even let a bear market develop…
I mean, if you have and maintain good liquidity, don’t lose your job and can continue investing as it goes down you can make very good returns even without margin.
Remember that dividends are not so irrelevant, and diversification is important, is my guess.
You won’t get an answer until they decide it’s the case. Remember a while ago there was one person on this forum that tried to achieve the professional trader status (to offset the losses), but so far didnt manage to get this status.
How would they be able to realize that? They don’t know at what time you take out a margin loan and they also don’t care what you do with your loan.
No, you don’t need to declare what you do with the money from a margin loan. The bank/broker providing the margin loan doesn’t care what you use it for, as long as you pay the interest and have enough collateral, they won’t bother you.
A general remark, breaking one of the rules doesn’t automatically make you a professional trader. Most of the time it is also in the tax office’s interest to not classify you as a professional, as you’ll then be able to write off your trading losses.
People here on the forum do option trading (not for hedging), take margin loans, hold securities less than 6 months and none of them has been classified professional.
Enjoyed reading this thread, after having had my own paranoia to be classified as professional trader throughout the years.
When in doubt it can also be helpful to request a ruling from the tax authority where you describe exactly the capital gains you plan to realize and then ask for a guarantee that they are tax free.
I actually did this last year, where I had some outsized BTC capital gains in relation to my wage. I sent an email to the Bern tax authority, asking for a ruling and within one week they replied confirming this ruling on the capital gains being tax free.
Still waiting for the actual tax report to be processed this year, but quite optimistic
Congrats for being the only person on the forum who has achieved this!
I guess you made substantial profits for the year in question. I’d get a lawyer and contest this. Unless there are some very specific factors, I do not see how someone can reasonably be classed as a professional trader when they are just trading in their spare time. I guess if you are maybe heavily trading in a systematic way or using sophisticated instruments.
FWIW. I have about 300 trades just year to date, have leverage, don’t keep stock for more than 6 months. Not sure what my volume is.
hahaha thanks.. it wasn’t about profit.. I proactively asked them for the tax of 2024 and wanted to get a ruling response from them and that’s what I learned. I will not fight back the rules are kinda clear and they say each case is different and the tax office in switzerland is allowed to open a case also after 10yrs.
Last year I got detailed questions by a letter with a title of tax evasion about an invoice of maybe 5k which they thought I double deducted on my private and my own company in 2020 (after 5yrs!). After some explanation they understood that we did everything correctly and they closed the case.
So in your case in my opinion you never know they can dip dive into it still after 10yrs and tax you. I hope it doesn’t happen of course..
Many people don’t realise that they are quoting safe-harbour rules and instead believe they are rules for determining if you are a professional trader.
yes I asked for the written ruling and I got it in written also, they pointed out that my broker reports shows several indicators of being a commercial investor. They also referred to the below content:
Thanks very much for sharing! Since you are such a rare breed, I hope you don’t mind being bombarded with interest and input and questions
May I ask why you asked them? You could just have continued under the radar.
Also, are you planning to change your investment strategy to be reclassified as private investor for future tax declarations?
Maybe you can make use of it and sell only losing positions before year end and offset losses against your income. Then you can see if they change their minds Deduct all your trading and incidental costs. Maybe you dedicate a computer solely for trading, or an office.
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thanks.. it wasn’t about profit.. I proactively asked them for the tax of 2024 and wanted to get a ruling response from them and that’s what I learned. I will not fight back the rules are kinda clear and they say each case is different and the tax office in switzerland is allowed to open a case also after 10yrs.
Deduct all your trading and incidental costs. Maybe you dedicate a computer solely for trading, or an office.