Professional trader status with multiple accounts

Hi fellow Mustachians!

This is my first post, so I hope I don’t violate any FAQ.
Here’s a hypothetical situation: Let’s say you have two trading accounts: one long-term ETF account where you do very few trades per year and one more active trading account where you do several trades per week including perhaps the odd Future and Option.

From a tax point of view the 2nd account will result in the tax authority to declare you as a ‘professional trader’ (or something like that) which means you pay income tax and AHV even, on whatever the gain is from that account.

My question: does whatever you have gains in the first, long-term account (talking about capital gains here) also fall under the professional trader status, even though you clearly separated the two strategies? Ie is the professional trader status globally applied or per account?

Thanks for any input!

Welcome :sunglasses:

The question to answer for the tax authorities is, whether YOU create income from securities in the manner of a professional trader.

Formal separations are not the garlic against vampires. It’s a substantive question.

Yes, but only realized gains/loss should be taxable. Until you sell from your long term account there’s nothing to tax except dividends

If you do occasionally sell, here’s a better idea: open up a GmbH, register your second account and do the trading in company’s name, GmbH will get taxed on capital gains with 100% certainty, but your first account won’t, assuming you personally meat all the criterias from the Kreisschreiben 36

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You may check these 2 helpful posts from @balmung regarding investing through a GmbH

The GmbH has to be alimented with CHF 20 000. This is your trading money and will remain in the company.

Additionally, you will have to understand and follow the corporate rules of a GmbH (annual meeting with yourself etc.). This is not complicated, but crucial.

This link (in german, google translate should work) can give you an overview.

Thx for the Gmbh links, might consider.

Just to recap: everybody in CH has 3 variants: (a) do not trade options/futures, (b) do trade them but apply for professional trader status or ( c) open a Gmbh?

(Poll) What are you guys doing mostly in here?

no, you can also trade them unprofessionally and hope that the tax authories won’t tax you - they might or might not at their discretion

I guess you could check this thread

Lol, love it.

“Mr. Taxman, all investing decisions, resulting in revenues of CHF XXXXXXXX, have in fact been made by my 6-month-old son: We gave him a sheet of paper to attack and made those trades that were still legible afterwards!”

PS: I know what you meant.

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This conversation kind of reminds me of this (xkcd 1494):


I think I must have had this at the back of my mind:

Give a monkey enough darts and they’ll beat the market. So says a draft article by Research Affiliates highlighting the simulated results of 100 monkeys throwing darts at the stock pages in a newspaper. The average monkey outperformed the index by an average of 1.7 percent per year since 1964. That’s a lot of bananas!

What is all this monkey business? It started in 1973 when Princeton University professor Burton Malkiel claimed in his bestselling book, A Random Walk Down Wall Street, that “A blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts.”

“Malkiel was wrong,” stated Rob Arnott, CEO of Research Affiliates, while speaking at the IMN Global Indexing and ETFs conference earlier this month. “The monkeys have done a much better job than both the experts and the stock market.”

Sounds real fancy :slight_smile:

Though imagine this is a terrible idea for Americans, dealing with PFICs etc.