Is trading/investing subject to CIT?

[inector]

Hey, a bit confused about the CIT (not capital gains) for trading/investing.

If one buys 1000 EUR worth of ETFs, in like Switzerland, where it's ~15% CIT, does he pay ~150 EUR on them?

Capital gains tax is clear, which is simply tax on profits, but how's CIT treated.

 

[JackAlabama]

inector said:
Hey, a bit confused about the CIT (not capital gains) for trading/investing.

If one buys 1000 EUR worth of ETFs, in like Switzerland, where it's ~15% CIT, does he pay ~150 EUR on them?

Capital gains tax is clear, which is simply tax on profits, but how's CIT treated.
Click to expand...

you live in switzerland?

 

[WorldCitizen99]

inector said:
Hey, a bit confused about the CIT (not capital gains) for trading/investing.

If one buys 1000 EUR worth of ETFs, in like Switzerland, where it's ~15% CIT, does he pay ~150 EUR on them?

Capital gains tax is clear, which is simply tax on profits, but how's CIT treated.
Click to expand...

What I have picked up from my accountant and internet research is the following:
Tax authorities generally distinguish between investing and trading
If you buy and sell securities frequently, in larger volumes, with the intention to make profit, they may consider that activity trading and then it will be subject to income tax as a business activity. If you make relatively low-volume purchases and sales, then they will usually regard this as investment and it will be subject to capital gains tax. It's annoying bc it's a grey area and you don't always know what cutoffs they use to decide between trading and investing.
Of course, with either trading or investing, you only pay tax when you sell and have made some profit.
I don't know about Switzerland specifically. I usually consult the Deloitte or E&Y tax summaries

https://www2.deloitte.com/content/d...s/Tax/dttl-tax-switzerlandhighlights-2023.pdf
https://assets.ey.com/content/dam/e...porate-tax-guide-21-sep-2023-v2.pdf#page=1751

Last edited: Oct 21, 2023

 

[inector]

JackAlabama said:
you live in switzerland?
Click to expand...

Assuming yes, but it will be the company which invests.

WorldCitizen99 said:
If you make relatively low-volume purchases and sales, then they will usually regard this as investment and it will be subject to capital gains tax
Click to expand...

Interesting, obviously will hire a lawyer for this soon, just curious if it's worth the trouble. It's a big difference, since in many countries capital gains can be 0-1% and CIT is like 5-15%.

 

[WorldCitizen99]

inector said:
Assuming yes, but it will be the company which invests.

Interesting, obviously will hire a lawyer for this soon, just curious if it's worth the trouble. It's a big difference, since in many countries capital gains can be 0-1% and CIT is like 5-15%.
Click to expand...

Is the business of the company the trading of ETFs or other securities, or is it a real business and you are just investing from the business' portfolio?
Are you trading frequently, like daily, or only occasionally?
Your accountant should be able to give you an idea. I doubt you need a lawyer unless your accountant suggests it

 

[JimBeam]

If your company makes profit - it will pay CIT on those profits.

WorldCitizen99 said:
Is the business of the company the trading of ETFs or other securities, or is it a real business and you are just investing from the business' portfolio?
Click to expand...

This is a good question so if your company invests it's (after tax) profits into something than it should be fine.
But if that's the main activity of the company - good luck in getting the license and banking (in just about any country - and especially in Switzerland).