Taxes after FIRE

[stra]

Dear all,

I would like to know how many taxes one has to pay after being FIRE in Switzerland.
Assuming you have reached your FIRE number, e.g. 1 million CHF, and you stop working, so you have no income. You have some money from dividends, so you are directly taxed on them. BUT on top of it you sell occasionally some of your stocks to have some additional money. Are you taxed on those capital gains, since this money will be your main means of survival? and if yes, with how much percentage?

thanks in advance for your feedback.

PS: I read the book of Mr M, but I didnt find this info…

[Barto]

You will continue to pay wealth tax in addition to income tax on dividends. There should not be any capital gains on shares so long as you avoid being classified as a professional investor (there are threads on this forum about professional investor status that others may be able to point you to)

Here a couple of threads discussing costs after FIRE:

Costs after early retirement

Is there a thread anywhere that recaps the costs and taxes after retiring early in Switzerland? (meaning no longer having a salary) AVS / social security : I read somewhere you might have to keep pay longer based on wealth - does anyone have a resource explaining how it works? wealth tax Income tax on dividends and interest Income tax on deemed rent if you own real estate Health insurance- are they allowed to increase premiums with age? Thinking longer ahead: Residential care (EMS) does a…

What things to consider for the FI number?

During discussions at the latest Meetup in Zurich I realized that since my expenses for the year are at around 100k CHF including taxes, my FI expenses would be roughly 36k CHF lower. And an income of 70k CHF would lead to only 9k CHF in taxes, so my real FI expenses would be around 75k CHF. What other things have to be considered for the FI number? I’m unclear about things like: Keep paying for AHV Pillar 1 until 65? How much would that be? Keep paying for Pillar 2? is it possible? Keep payi…

[stra]

Very clear!

Thanks a lot for your very quick feedback!

Is there a Meetup in ZH btw?

[Daniel]

Wealth tax, property tax (if you own your home), income tax on dividends/interest and (if you own your home) on imputed rental income, retirement capital withdrawal tax, and value added tax are a few that come to mind. The first four vary a lot between cantons. For example, the wealth exemption for wealth tax is much larger in some cantons than others. And of course, the rates as well.

Depending on what kind of investments you hold, how high your wealth is, and whether you own a home, the biggie will be either income tax or wealth tax.

[ChrisL]

There will also be some mandatory contribution to the 1st pillar pension until you reach retirement age, unless your spouse is covering the minimum contributions for both of you. Without income, the mandatory contribution is scaling with your wealth, currently starting 503 CHF per person, increasing to 2’014 at 1Mill taxable wealth, 4’399 CHF at 2Mill taxable wealth… So approx. a 0.20 - 0.25% hit on portfolio performance (not including 2nd & 3rd pillar), on top of wealth tax.

[stra]

Amazing, thanks a lot for the very detailed answers!

It’s much more clear now.