Thinking about moving to Switzerland and live from passive income

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21

@Moustachienne and my concern about your post really stops at that, a compliment :slight_smile: .

22

your german one?

Did you already talk to the respective tax offices? They wont invoice you for asking.Or let a lawyer or TreuhÀnder ask if you dont want your name mentioned in the first discussion.

23

Both paragraphs don’t seem to compute.
First paragraph maybe because we don’t have the full picture but I feel like - taking into account higher COL in CH - either you’d be too “poor” or to “rich” to care one way or the other. Maybe you’re in the “just rich enough to care” spot.
Second paragraph: what makes you think random people in a forum will know then?

@JEPG and @Mirager thanks :+1:

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24

The easiest way is to try to trade in a way that falls within the safeharbor rules.

And maybe live in a low tax jursidiction so it hurts less if you are taxed.

Unfortunately, it’s a catch-22 situation as you have no certainty unless you ask for a binding ruling, and asking for a binding ruling brings attention to it which makes it more likely to be considered professional.

25

If you’re that good at trading and you’re serious about doing this long-term, just create an company. You’ll pay corporate taxes but it is the only way to completely rule out the professional investor status issue.

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26

Thank you.
If I ask the tax authorities in the cantons of Zurich and Schwyz whether they classify me as a professional securities trader, I’m afraid I might stir up trouble (schlafende Hunde wecken).

I’m not sure if it’s a good idea to ask the tax authorities.

My passive rental income is over 65,000 CHF.

I mostly trade only futures. I trade very few stocks. But I have a few stocks where I use a buy-and-hold strategy.
Even if it sounds silly: I don’t know how to measure turnover and book size for futures.

Number of transactions per year: Between 150 and 400. Mainly futures.

The average holding period for futures is usually about 1–2 months.

To the tax authorities you could say that futures are mainly purchased for hedging purposes.

It’s probably a matter of opinion or interpretation whether a future was purchased for hedging or for speculation.

Does the tax office check whether a future was purchased for hedging or for speculation?
I don’t know how they’d go about checking that.

27

You’re safe. (Assuming you have a seatbelt and airbags).

28

More seriously. I don’t know Germany. Here is net worth taxable. So it is also monitored. You have to report all your positions whether they are securities, cash, watches, whatever on your tax return. And every transaction.

If you have 100K intl rental income revenue -that is not even taxed in CH, it’ll just compute your tax rate on your 0 CHF CH-taxable-revenues, apart from dividends you may earn-

and your NW jumps by 300K yearly, over several years, they sure will ask questions.

If the gap is realized capital gain, trading leverage products, my question would then be: who’s actually eligible for professional investor status, if not that?

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29

It is a matter of opinion. The tax office has a good amount of discretion in the matter. If they decide you are a professional investor, you would have an opportunity to fight it.

However, hedging means there is something to hedge. Hedging rental income and a few stocks with futures would be a brand new strategy to me. I don’t say they would qualify you as a professional investor but if they do, I personally wouldn’t bet the “hedging” explanation to have a leg to stand on.

Then again, it is a matter of volume but you would probably not go through this process for just a few 10ks of trading gains.

Edit: I would still contact the tax office. They might have a flat taxation deal to offer you depending on the amouints we are talking about and provided you don’t work in Switzerland.

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30

I think using futures or options for hedging means that you also own the underlying in opposite quantity. For example you hold 100 Apple shares and you also have a futures contract to sell 50 of them. Or you hold 1000 EUR of German bonds and have a futures contract to sell 700 EUR for CHF.

But if you have futures contract to sell 1000 Apple shares, or a futures contract to buy 100 of them, or a futures contract to buy 100000 EUR against USD, that’s not hedging existing positions any more.

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31

I dont think this will be the case. I mean, you cant hide when moving to CH. Only change is, that you have a reliable answer now, and kot after living in switzerland 1 year.

Also you cant hide ask a TreuhÀnder to submit this questions but that the dont mention your name. It is common that the subject stays anonymous at first. Sure for a binding rouling you will need to identificate yourself

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32

This is very interesting. You don’t mention anything about realized capital gain. If that’s also huge amount either you’re lucky or ZH is very friendly or all this professional stuff is total BS.

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33

Thank you.

Regarding flat taxation in Switzerland:

To be eligible for flat taxation in Switzerland, you must not be self-employed in Switzerland.
But if Switzerland classifies me as a professional securities trader, then that is considered self-employment. Is that correct?

If I apply for flat taxation in Switzerland and Switzerland classifies me as a professional securities trader, then that would be considered self-employment. And this self-employment means I cannot take advantage of flat taxation. Is that correct?

If you use flat taxation in Switzerland, you have to pay at least approximately 150,000 CHF in taxes per year. That is the minimum amount the Swiss tax authorities require for flat taxation.

If I move to the canton of Schwyz:
Under normal taxation in Switzerland—i.e., not flat taxation—I would have to pay the following in the canton of Schwyz per year:
Income tax: 0 CHF
Wealth tax (net worth tax): approx. 19,000 CHF

Therefore, flat taxation in Switzerland would be much more expensive for me.

34

I knew flat taxation has a high floor. I don’t think I have written about flat taxation.

If this comes with hundred of Ks of realized capital gain, I would call it “unfair”, but good for you.

According to @DRPF that is feasible though.

Then I don’t understand why anyone in particular hnwi who are targeting Swiss as a tax haven with flat tax would not go that way first. Have intl real estate generating life needs tax free (in CH) income and trade liquid securities CH tax free.

35

Thank you.

Can you tell us if you’ve made a lot of profit from your trading in the Canton of Zurich?
Because whether you’re classified as a professional trader depends heavily on the amount of profit you make. At least, that’s how I understood it.

36

I did, and I hadn’t done my homework before doing so. It’s probably not an interesting option in this context. My bad.

37

The devil is in the detail.

Whether it’s more plus or minus 7 digits, I understand that this kind of loss does not want to be offset by tax office :joy:

(I get you meant “around 7-digit capital gain, not millions swing).

38

My English isn’t very good, so I’ll ask again.

@DRPF:

Did I understand that correctly?:

You made more than 300 trades per year in the canton of Zurich with securities that are more complex than futures, and you sometimes made more than CHF 1,000,000 in profit in a single year. And yet you weren’t classified as a professional trader in the canton of Zurich?

39

One potential difference: they do pay swiss tax on some income. No idea if that matters.

40

If, for example, one was classified as a non-professional securities trader for the year 2024, can the tax authority retroactively change this classification for the year 2024?

Example:
One or two years later, the tax authority realizes it made a mistake in classifying you as a non-professional trader. Can the tax authority still change the classification for the year 2024?