switzerland

[Kicking]

A referendum on taxes? !
Geez if I had a chance to vote no to taxes I certainly would . Why did 80 % vote yes to taxes?

VAT is an evil concept, it taxes goods and labour . For ex. you go to the garage to have your car repaired , you will pay 20% on labour and parts. It's unbelievable people put up with that tax. This tax alone would justify a revolt.

There are still advantages buying in the US, but not if you end up paying VAT at 20% of course, I never had to pay it for smaller items . If you go to Newegg, you have 10 times the choice you have anywhere in Europe, reviews, complete specs etc . The problem is often warranty will be void in Europe, so unless you can save more than a $100-200 or have the ability to ship back at reaonable cost, I would not do it. You also need someone to send you the packages because many US companies will not ship internationally.

 

[science_trader]

Quote from Kicking:

A referendum on taxes? !
Geez if I had a chance to vote no to taxes I certainly would . Why did 80 % vote yes to taxes?

It wasn't a referendum. As in a lot of countries, federal taxes are allowed by law for a defined period. This law has to be renewed each time. In most countries the parlament does it, but Switzerland is one of the unique true democracies in this world....

Why did people vote yes ? Because you need taxes to allow the State to do something for you : schools, roads, defense, law courts, etc...

 

[Kicking]

I understand some Cantons may treat a trader's capital gains as regular income . Someone posted a link to a paper on a cantonal court (Bern) decision regarding the treatement of capital gains. I understand the court ruled that capital gains from the management of personal assets are not subject to taxes if at least one of 3 conditions were met, one is that the account does not exceed CHF 200 ,000 . I can't post all the details, I wil try to find the article and post a link .

I am trying to find out the situation in the cantons of Vaud, Valais, Geneve and Neuchatel. Anyone from the canton of Vaud ? that's where I am most interested in moving to. Would be nice if trading profits were not taxed.

What is the "caisse AVS"? it's an organization you have to register with to prove self-employed status in order to get the residency permit. Is it another name for health insurance coverage?

 

[science_trader]

Quote from Kicking:

I understand some Cantons may treat a trader's capital gains as regular income . Someone posted a link to a paper on a cantonal court (Bern) decision regarding the treatement of capital gains. I understand the court ruled that capital gains from the management of personal assets are not subject to taxes if at least one of 3 conditions were met, one is that the account does not exceed CHF 200 ,000 . I can't post all the details, I wil try to find the article and post a link .

I am trying to find out the situation in the cantons of Vaud, Valais, Geneve and Neuchatel. Anyone from the canton of Vaud ? that's where I am most interested in moving to. Would be nice if trading profits were not taxed.

What is the "caisse AVS"? it's an organization you have to register with to prove self-employed status in order to get the residency permit. Is it another name for health insurance coverage?

Vaud and Geneva are painful for taxes. Fribourg and Valais are quite cool. I don't know for Neuchatel. Note that Vaud and Geneva have a disastrous budget at the moment and I wouldn't be surprised if taxes in these cantons increase one of these days...

The 'caisse AVS' is the social pension system. It's 9.5% of your net income. Pension is now around 2000$/month, once you are 65. Pension system is based on 3 'pilars'. First is social : AVS, gives you 2000$. Second is bounded to your employer (called LPP), and gives you 80% of your last salary. There is a compulsory and a non compulsory part. Compulsory part is till 65000$/year. Third is private and on a willing basis, but you cannot manage your money for yourself (a real pain for a trader...) and have to rely on an insurance or a bank.

 

[Kicking]

OK I found the link to the article, for those who haven't seen it, it's in the "anyone from France?" thread :

http://elitetrader.com/vb/showthread.php?s=&threadid=29022&perpage=6&highlight=france&pagenumber=12

I am looking at Valais too but I would like to be close to Geneva.

The paper talks about the "average securities portfolio " to determine whether
capital gains are taxable or not. I suppose that means the average value of securities being held over the fiscal year. If you trade futures , you stay easily under the CHF 200,000 threshold even with a sizable account.

 

[science_trader]

Quote from Kicking:

OK I found the link to the article, for those who haven't seen it, it's in the "anyone from France?" thread :

http://elitetrader.com/vb/showthread.php?s=&threadid=29022&perpage=6&highlight=france&pagenumber=12

I am looking at Valais too but I would like to be close to Geneva.

If you want to live close to Geneva, rather than taxes, you should consider the cost of living. It's about 25% higher than in north of Vaud, Fribourg or Valais. Moreover, your health insurance is dependent on the region where you live...and guess what : it is very expensive in this area too (and the service isn't really better....)

Don't forget that taxes are very dependent on the city/village where you live. It's usually a percentage of cantonal taxes. You can find some where you only pay 70% of the cantonal tax, but others where it is 125% !

With a federal tax around 5% and a cantonal tax around 10%, this can be a 3% difference !

 

[science_trader]

Quote from Kicking:

The paper talks about the "average securities portfolio " to determine whether
capital gains are taxable or not. I suppose that means the average value of securities being held over the fiscal year. If you trade futures , you stay easily under the CHF 200,000 threshold even with a sizable account.

Trading futures should make you directly a 'professional'. But this wouldn't happen in a canton like Valais or Fribourg....as in these tax administrations nobody knows what a 'future' or a 'day trader' is...

 

[Kicking]

Anway I got everything mixed up, the paper is about a Federal Supreme Court (not cantonal court) decision ruling that a trader's capital gains are taxable. But following that ruling the canton of Bern still does not requalify capital gains as regular income if 1 of 3 conditions are met, see bottom of article.

What about the French speaking cantons ? Do they follow the Supreme court ruling to the letter or do they have special exemptions like the Bern canton?

 

[Kicking]

Quote from science_trader:

If you want to live close to Geneva, rather than taxes, you should consider the cost of living. It's about 25% higher than in north of Vaud, Fribourg or Valais. Moreover, your health insurance is dependent on the region where you live...and guess what : it is very expensive in this area too (and the service isn't really better....)

Don't forget that taxes are very dependent on the city/village where you live. It's usually a percentage of cantonal taxes. You can find some where you only pay 70% of the cantonal tax, but others where it is 125% !

With a federal tax around 5% and a cantonal tax around 10%, this can be a 3% difference !

That's right. I think my best bet would be within an hour drive from Geneva, cantonal and church taxes not exceeding 220% of the federal tax , and no taxation of capital gains even for a trader.

 

[science_trader]

Quote from Kicking:

Anway I got everything mixed up, the paper is about a Federal Supreme Court (not cantonal court) decision ruling that a trader's capital gains are taxable. But following that ruling the canton of Bern still does not requalify capital gains as regular income if 1 of 3 conditions are met, see bottom of article.

What about the French speaking cantons ? Do they follow the Supreme court ruling to the letter or do they have special exemptions like the Bern canton?

1) The law states that capital gains made on private wealth are not taxed.
2) The law states that capital gains made on commercial wealth are taxed.
3) The Federal Court ruled in a precise case that under certain conditions, an individual should be declared as an independent professional who trades financial securities and hence his income based on capital gains be taxed.
4) The Bern court gave an administrative decision, valid only in canton Ber, to precise conditions. I don't know any other cantonal ruling.
5) Some politicians have asked the government to precise these conditions on a federal basis. This is at the moment the subject of a study at the federal level...and is very slow. It should be included in the new tax law, but it isn't clear yet when this will come out (2007 ? 2010?).

As you can see, it's a real mess at the moment, and I don't think you can really know how things will be in 2-5 years from now.

You must know that Switzerland doesn't work like EU or US. Here you have a real freedom and independence with respect to the state. If you don't give tax authorities the detail of your trading, they will never know exactly that you're daytrading ! The only thing they want to know is : what is the amount on your account and how much have you earned in interests and dividends on it. They don't think a priori that you're daytrading and hence don't ask you for all transactions.

Moreover, not declaring your trading account to the tax authorities is not a penal crime. If they discover it one day, the only thing you risk is a fine up to 50000 CHF...

And finally, as I said it in another thread : all this mess about capital gains was in 99 because socialists (30% of the parlament...) thought they could tax these gains to finance social benefits. But then came the 2000 bear market...and they realized that under such conditions they would have to recognize tax reductions because of capital gains losses, and were not that much interested in the story anymore....