I have a question about whether I can invest in my Partners name for a time period, just to take over that account later.
Right now I’m living in Sweden but I’ll be moving to my girlfriend in Switzerland within a year or so. It feels unnecessary continuing investing here in Sweden, when I know I have such a short time horizon because I need to sell everything before I move.
Is it possible for us to open a IBKR account in her name, and then “make it mine” in a year or so when I’m officially in Switzerland? Or do we have to sell everything and buy in a new account?
Yeah I think it’s possible for me to open an account. However, the taxes on capital gains differs a lot between Sweden and Switzerland. I don’t want to be stuck on a swedish based account where i have to tax 30 % on my gains if I don’t live here anymore.
But perhaps it’s possible to notify IBKR about my change of residence, so they’ll stop reporting to swedish authorities?
As long as you‘re resident in Sweden and it‘s your funds, you have to pay them anyway.
If it’s your money that you‘d be trading with, only in the name of your girlfriend - that proposal basically amounts to illegal tax evasion. And it would very likely violate IBKRs agreement (though you could probably have a joint account with your girlfriend or even administer her trading on her money).
Regardless of actual reporting, if you move from Sweden to Switzerland, you will (generally) cease to be a Swedish tax resident and not pay taxes in Sweden anymore.
(there may be some transitional rules for the year you’re moving, some countries do have exit taxes or particular, limited exceptions for emigrants, that are basically trying to counter emigration that is only intended avoid taxes, but these are rare cases and unlikely to apply for personal investors that genuinely move to another country for employment or work. Keep in mind that the EU intends to guarantee your right of free movement in Europe and remove impediments to that).
I don‘t know how IBKR’s EU entities deal with that once you‘d leave the EU. In any case, unless you‘re classified as a professional investor, you they won‘t let EU residents trade them.
Taxation is (generally) based on your current tax residence. NOT on your country of residence at the time of opening up an investment account and NOT on the country your account/bank or broker is located.
I’ve just sent a question to IBKR about the possibility to make an "EU account to a “Swiss account” with access to US ETFs. I’ll update with their reply.
A joint account could also be an idea, I’m going to read up on that.
I’m afraid the concept of “paying” capital gain taxes in Switzerland while being a tax resident of Sweden reeks of tax evasion (as opposed to tax optimisation). The only way I could see that happen is if you create a company in Switzerland, which would then be taxed as a swiss company (which is taxed on capital gains), and invest through it. I’d give up the idea altogether and just pay swedish taxes while I live there.
I think it really depends on the amount you want to invest over the next year, before your move and the tax regimen.
Do you have a significant lump sum or it’s more a starting portfolio with monthly savings?
As mentioned above, are you taxed at gain realization or otherwise?
The easiest solution would be to open an account and invest now, since you’re likely to obtain a positive return that may or may not be taxed (disclaimer: past returns are not indicative, etc. etc.), then ask IB if they move your account to their UK entity and consequently transfer the shares without selling, since selling is likely the event that triggers tax deduction a transfer may be efficient in this case.
Assuming you are effectively moving your tax residency, you need to notify IB and both governments in any case.
Giving money to your GF and then having her return it back to you after investment (regardless who has the credentials to the IB account) needs to be reported as loan or gift to the tax authorities of both countries, AFAIK. Don’t forget also that an account on her name will likely only allow a transfer of funds from her bank account, so you need to shoulder some international transfer from Sweden to Switzerland in some form.
Even easier would probably be if he continued to invest with his Swdish account. And then just open an IBKR account from scratch once he‘s a Swiss resident.
Even if they‘re taxable upon exiting the country, it doesn‘t change anything regarding his decision.
I believe you will not have to pay capital gain tax once you move out of Sweden (perhaps a few years after the actual move though). Call/write to the Swedish tax authorities and check with them.
„Individuals who have been resident in Sweden continue to have a tax liability on capital gains from the disposal of, inter alia, Swedish stock and similar assets during a ten-year period after they leave Sweden. This time limit is reduced in several double taxation agreements (DTAs).“
(But note the wording of „Swedish“ assets. It may be useful to determine what this means)
I’ve been in contact with the tax authority before and I was told I would pay swedish capital gains for five years after I move move from Sweden to Switzerland.
If it’s possible for me to make my EU IBKR to a Swiss/UK account, without having to sell or pay taxes, I think this is what I will do.
"Please note that the retail clients from European Economic Area (EEA) are restricted from creating fresh positions in US ETFs. With respect to the PRIIP and MiFID regulations, Interactive Brokers is required to categorize its clients as either Retail or Professional in order to determine the correct level of investor protection and transparency. It is possible to be reclassified from retail to professional once certain qualitative, quantitative and procedural requirements are met. Qualitative Reemphasized textquirements: we must conduct an assessment of your expertise, experience and knowledge to ensure that you are capable of making your own investment decisions and that you understand the risks involved. Quantitative Requirements: we must ensure you have satisfied two of the following criteria: -You have carried out trades in significant size on the relevant market at an average frequency of 10 per quarter over the previous four quarters; –Your portfolio including cash exceeds EUR 500,000; -You have worked in the financial sector for at least one year in a professional position. -If all of the above are satisfied, the corresponding team will review the request. Documentation of any portfolios held or trades executed away from IBKR may be required. However, you should be able to trade in US CFDs instead of US ETFs. For information on the available CFDs, please refer the below link: https://www.interactivebrokers.co.uk/en/index.php?f=1563 Referring to the point of the ability of Swiss residents to trade in US ETFs, you may note that currently, the residents of Switzerland may be able to open fresh positions in the US ETFS, however, post 01 January 2022, there may be some restrictions imposed on them in regards to opening fresh positions in US ETFs. Hence, we would request you to please check with us on or after that date so that we can provide the relevant information."
OK, so I need to be classified as a “professional trader”, don’t know if I can meet those requirements…
Also interesting about the possible upcoming restrictions…
I guess I’ll wait and see.
As I understand it, being classified as professional customer by opting-out of FIDLEG protection is completely independent of the tax classification as professional trader (Gewerbsmässiger Wertschriftenhandel). I.e., opting out of FIDLEG doesn’t imply that you have to pay capital gain taxes.
You can try moving positions using the ACATS system to transfer positions from one account to another without having to sell.
Many people have done it to transfer assets into IB from other brokers, I guess it would also work from one IB account to another as long as they’re both under your name.
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