Investments and personal assets offer a wide range of tax opportunities and regulations. In Switzerland, income from securities – such as interest, dividends, and capital gains – is subject to income tax. However, there are also tax benefits, such as the deduction of interest on debts and certain custody fees. This chapter explains the key tax aspects related to investments and assets.
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Holding securities such as equities, bonds, or fund units results in income that is subject to tax. Yet taxation varies depending on the kind of income.
Interest from fixed-income securities (e.g., bonds) and dividends from equities or fund investments are generally subject to income tax. These earnings must be listed as income in the tax report and are therefore taxed as such. The tax burden depends on the applicable tax rate and allowances.
Capital gains – in other words, the profit earned from the sale of securities – are generally not subject to income tax in Switzerland, provided the securities are held as private assets. This means that profits from the sale of shares, bonds, or other investments held in private portfolios are tax-free. However, there are exceptions, such as cases where the activity is classified as professional securities trading.
Individuals who trade securities regularly and on a large scale may be classified as professional traders. In such cases, profits from the sale of securities must be declared as taxable income. The tax authorities will assess the frequency and nature of the transactions as well as the investor’s level of involvement to determine whether the trades are to be considered professional trading.
Capital gains must be declared as income if the trading activity is regular and profit-oriented.
Anyone who takes out a loan to finance investments or assets can deduct the corresponding interest payments from their taxable income. This applies to both personal loans and mortgages used to finance assets. However, the deductibility is limited to the amount of income earned from those investments, meaning that unlimited deductions are not permitted.
Whoever takes out a loan to finance investments or assets can deduct the corresponding interest payments from taxable income. This applies to both personal loans and mortgages used to finance assets. However, the deductibility is limited to the amount of income earned on those investments, meaning that unlimited deductions are not permitted.
Custody fees incurred for the safekeeping of securities with a bank or financial institution are also tax-deductible. This applies to all types of securities accounts used to hold and manage investments. These fees must be declared as management expenses in the tax return and can be deducted from taxable income.
In addition to interest on debts and custody fees, other costs associated with investments – such as management fees for investment funds or financial advisory costs – may also be tax-deductible in certain cases. It is important to collect all relevant receipts and accurately report these expenses in your tax return.
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