Risk of being reclassified as a professional securities trader when financing investments with a private loan?

Taxes
1

Hi everyone,

I’m thinking about taking out a private loan and investing the proceeds via IBKR into ETFs and stocks.

My situation:

• The annual dividends from my entire portfolio (including all existing positions) are slightly higher than the annual interest cost of the loan.

• I do not breach any of the other four criteria of ESTV Circular No. 36 (Kreisschreiben Nr. 36): minimum 6-month holding period, annual transaction volume < 5× portfolio value at the beginning of the year, realised gains are not needed to cover living expenses, and no derivatives except for hedging.

Question: How high do you rate the risk that the tax authorities could still classify me as a professional securities trader (gewerbsmässiger Wertschriftenhändler) and tax my capital gains as self-employment income?

Has anyone here had experience with a similar case (private loan → IBKR investments + dividends > interest)?

Or does anyone know of someone who obtained a tax ruling / advance decision (Vorbescheid) from the tax office on this topic?

Thank you very much in advance for your thoughts!

Greetings

Peter

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This is a topic that is often discussed in this forum.

My short answer is: based on your assessment, especially “realised gains are not needed to cover living expenses”: you have a low risk of being classified as professional trader.
So far, there was one forum member who proactively asked for an assessment and was classified as professional trader. See here:

This thread discusses margin loans and professional trader status:

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If this is accurate, and assuming you don’t have any other loans, you pass all 5 criteria of the “Vorprüfung”. As long as this is the case, the tax office is not allowed to classify you as professional trader. So there is practically zero risk:

Are you talking about a margin loan or an unsecured consumer credit? The former may be reasonable, depending on the leverage and other aspects, but I would definitely not recommend the latter due to the (usually) high interest rate.

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Many thanks for your help!

If the loan sits at IBKR in Cash for a Couple of months, will that interest received help me to make the margin between loan interest (tax negative) and dividends (tax positive) even bigger? No?

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Only if you convert it to a foreign currency with a sufficiently high interest rate. But that would then be currency speculation (likely at much higher cost than with instruments made for this). Why would you want that? Why not just use a margin loan with sufficiently low leverage to not risk violating the tax rule?

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Then I am doing something wrong! Whenever I check for margin loan in USD, I End up above 5% interest! And for the private loan I would only pay half.

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Would that private loan be in USD?

2.5% is below the “risk free” rate for USD. Reverse repos are at 3.5% and the rate only goes up with duration, all the way to 5.14% for 20 years terms and slightly less than that but still above 5% for 30 years (as of the writing of this message). For any given term, the lender would make more money buying US Treasuries than lending to you.

Private loans often come with amortization requirements, does your potential one have one?

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To second @Wolverine I don’t think you can get a consumer loan in USD in Switzerland or Germany. Such a loan is more likely in EUR or CHF.

Margin loans on IB:

USD
0 ≤ 100,000 5.130% (BM + 1.5%)
100,000 ≤ 1,000,000 4.630% (BM + 1%)

CHF
0 ≤ 90,000 1.500% (BM + 1.5%)
90,000 ≤ 900,000 1.000% (BM + 1%)

EUR
0 ≤ 90,000 3.396% (BM + 1.5%)
90,000 ≤ 900,000 2.896% (BM + 1%)

Cembra will give you a consumer loan in CHF starting at 5.59%.

→ margin loan in CHF is way cheaper than consumer loan in CHF.

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Oh wow, this was the thinking problem! I thought I can only take a loan on IBKR in the currency that I need. But obviously I can go negative on the CHF account and FX it to USD.

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Just to rule out any misunderstanding:

Die Anlagen sind nicht fremdfinanziert oder die steuerbaren Vermögenserträge aus den

Wertschriften (wie z.B. Zinsen, Dividenden, usw.) sind grösser als die anteiligen

Schuldzinsen

They refer to the overall taxed dividends or interests from the whole portfolio, right?

Not that they check only the margin loan bought ETFs, which clearly would need to have higher dividends than loan interests.

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Yes, over all your assets, not even limited to a single portfolio (if you have anything else).

That’s not something that could even be determined. E.g., you could buy various ETFs in cash and then withdraw a margin loan, in which case you technically didn’t buy anything on margin but you then hold ETFs on margin. Or when paying back part of the margin loan (via dividends or cash deposits), you don’t specify what you’re paying back, it simply reduces the margin loan (assuming matching currency).

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The only piece that can be violated in strong years is this:

Das Erzielen von Kapitalgewinnen aus Wertschriftengeschäften bildet keine
Notwendigkeit, um fehlende oder wegfallende Einkünfte zur Lebenshaltung zu ersetzen.
Das ist regelmässig dann der Fall, wenn die realisierten Kapitalgewinne weniger als 50%
des Reineinkommens in der Steuerperiode betragen.

I hope that this is assessed reasonably. If your portfolio has a decent size, it can easily happen that the gains succeed the even way above average salary.

I wonder if they try to trick retired people who live >70% off of their portfolio, besides AHV and 2nd pillar.

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Keep in mind this is talking about realized capital gains. While in the accumulation phase, you normally don’t sell any shares, in which case you definitely won’t violate that rule.

You might violate that rule in (early) retirement, though. If you’re just selling then, not actively trading (besides occasional rebalancing), I wouldn’t be worried about being classified as professional investor during retirement, though. If you still want to use a margin loan during retirement (I wouldn’t), there might be some risk but I can’t assess it.

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Understood.

But I really wonder what happened to those guys who i.e. sold their tenbaggers and exceeded way beyond their salary. There are situations where taking profits is the only smart thing to do.

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Great to hear that. I hope that you really need to „deserve" the professional investor status and that it can’t really surprise you.

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I know this topic is discussed a lot on Reddit and in this online forum - I made an account just to comment on this:

If your’re a buy and hold investor and you hold your securities over multiple years, selling them monthly or quarterly to live off principle, capital gains and dividends - there is absolutely 0% chance of you being classified as a professional trader.

The term by the tax authorities in German is: “Gewerbsmässiger Wertschriftenhändler”. There is no notion of “Gewerbe or Gewerbsmässig” - you are just a regular dude managing your wealth with stocks or ETFs - you don’t buy or sell them frequently to make money - in fact, you can even prove that you basically bought every month (or at least regularly) without any intent of selling for decades usually. This isn’t something special either - if you sell gold or your car or yu-gi-oh cards, it also doesn’t get taxed - unless it’s your job to do so (owning a TCG shop, gold store, etc.)

Even if you use margin - which I have been doing for years now (3-4y on IBKR and now for my downpayment), the tax authority can not and will not classify you as a professional trader. last year (2025), I sold all my VT ot buy VWRD at LSE - the reason was the purchase of my appartment (no DA-1 refund if you have large debt). I made profits that were higher than my taxable income - and significantly higher than my net income. My leverage ratio is over 1.3x - they couldn’t care less, because I am not a professional trader.

A professional trader is someone earning most of their income by frequently trading (100s of trades a quarter) stocks in very large volumes (multiple millions per quarter) using trading instruments with high leverage (10x, 100x) - not you, not me and probably almost no one here.

The good thing is though - we and everyone curious doesn’t need to speculate. In fact, I don’t even know why no one else has suggested this, but you can request a tax ruling in advance - in AG it’s even free. The term for this is either “Steuerruling” or “steueramtlichen Vorbescheiden”.

Ein steueramtlicher Vorbescheid entfaltet seine Wirkung im nachfolgenden Veranlagungsverfahren, sofern und soweit dies durch den Grundsatz von Treu und Glauben geboten ist (BGE 121 II 479; VGE ZH vom 7.6.2006 = StE 2006 DBG/ZH B 25.6 Nr. 54, Erw. 3.1.3).

I really hope the confusion and misinformation around this topic is one and for all solved by this. Please spread the good word in the country and trust in the swiss authorities to continue catering to the wealthy - as we have done for over a century now. Act and vote accordingly - but I really hope this “mystery” is solved once and for all - or at least you know who you can ask now instead of asking randome internet strangers :slight_smile:

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Thank you Akia!

You helped me a lot :heart:

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