Personal professional crypto trading in Switzerland

[flyingadventures662]

Hello,


Today I met online a Japanese professional crypto trader who migrated to Switzerland. She told me in Japan due Tax was up to 55% and in Swizterland for professional crypto trading she pays 0.05%. Sounds crazy for me to believe. Can someone confirm?

Based on her words it had something to do specifically with crypto, who is considered special "tax-free" category in Switzerland. But I couldn't understand why she pays 0.05% if it's tax-free although even this sounds unreal to me.

We are talking about natural person entity, not company.

 

[Soundpeats]

Capital gains in Switzerland are usually tax exempt. So it would make sense

 

[flyingadventures662]

Thanks. I am still surprised. Are you a Swiss resident? Just wondering if it's really‌ true why Europeans don't go to Switzerland instead of Dubai to trade crypto.

 

[Soundpeats]

Some do of course, if you are a professional trader alone (and that's your only‌ business) its a good option. If you do more than just trading then it loses‍ some appeal vs other places

 

[Martin Everson]

She is⁠ naive. Does not work so well as a professional trader sadly. See below thread and⁤ link:

https://www.offshorecorptalk.com/th...lly-a-btc-tax-haven-at-all.36077/#post-198133
https://koinly.io/guides/switzerland-crypto-tax-guide/

 

[khinkali]

I am intrigued by this and if true I am surprised that I didn't see it‌ mentioned before.

I don't know if it is OK for me to invoke @Bagpacker given that we were arguing in another thread today, but he has given a lot of‍ detailed info about Swiss taxes before so let's see if he if I can get⁠ his attention...

 

[flyingadventures662]

Thanks. That was my‍ guess as well. Same story as Portugal if I am not wrong.

I specifically asked⁠ her about that and she confirmed she was professional. But maybe she has some luck⁤ not to get detected as such or something.

 

[KDX]

Tax authorities don't always act instantly. They can visit you years later. And,⁠ if you are paying 0.05% tax as a "professional trader" I imagine you would definitely⁤ be in their sights.

 

[backpacker]

No problem with arguing - that's the⁣ nature of this board.

Regarding the Japanese crypto trader and her 0.05%: For a professional⁢ trader capital gains are not tax free. In fact, the Japanese is even responsible to︀ pay AHV (social contribution, so-called "first pillar") on it. No matter in which canton she︁ resides, her overall tax rate would be significantly higher than 0.05%. These 0.05% hardly cover︂ Swiss wealth taxes which are due after your fortune crosses a certain threshold (-> >100k︃ , depending on canton and village).
Even if she considers herself as not being a︄ "professional" trader and she would wrongly assume to be a "private" investor, her capital gains︅ from crypto investment are not tax free because they are (most likely) her main source︆ of income.
The above is called "ordentliche Besteuerung" (ordinary taxation).
Note: Capital gains are only︇ tax free when these do not make up for most of your income.

However, this︈ person is a Japanese. Depending on the canton where she lives, it can be that︉ she struck a deal with the tax office of her canton and pays a "lump︊ sum tax" (Pauschalbesteuerung).
It is a bit similar to what Italy has on the cheaper︋ site (in Switzerland you will not get that deal for the Italian "fee" of EUR︌ 100k).
Such "Pauschalbesteuerung" would require her to only trade outside of Switzerland on assets who︍ are not related to Switzerland.
Lump sum taxation ("Pauschalbesteuerung") is only available to foreigners (i.e.︎ a citizen of Switzerland will never be able to get such a deal) and it️ is only offered by a limited number of cantons (for instance the canton of Zürich‌ abolished it a few years ago). The matter of lump sum taxation is highly political.‍ Ever more cantons are abandoning it. Nevertheless, if she has millions of trading income this⁠ would be the only solution for her to legally pay 0.05%.
Please note: Lump taxation⁤ for a professional crypto trader would be a novum. In today's political environment it is⁣ rarely granted and if granted than this status is preferably given to foreign celebrities.

 

[khinkali]

Thanks @Bagpacker I knew you'd have the detail on this.