Does self-trading require open a company in Switzerland?

Hi!

Do I need to open a company, If I would like to trade stocks/forex for a living full time? I do not want to sell a service to anyone but only make a living of trading with own capital. 

Is there any limit that above certain amount, for example CHF 500,000, one need to open a company and pay taxes accordinly. 

I‘ve lived and worked in Switzerland for a very long time in an international company completely different than trading. I have just recently lost my job since companies find cheap resources doing the same job remotely. At my current high age, it is difficult to find a job. 

I‘m well aware of trading risks as I have traded while I had a full time job. My passion has always been trading and investment. Could someone please advice where to find more information.

Or can I just buy & sell stocks/forex without opening a company and only declare my income at the end of the year? 

Are there any benefits to open or not open a company?

Thank you!

Hi there,

In Switzerland, you are not legally obligated to found a company in order to buy, own and sell securities. You have every right to engage in investment activities as an unemployed or self-employed individual. If your local tax office categorizes you as a private investor, your capital gains will not be counted as income for tax purposes. You can find the criteria used to determine whether you are likely to be classified as a private investor or a professional investor in the moneyland.ch guide to taxes on trading profits in Switzerland.

Social security contributions

As an unemployed person you will still be obligated to make social security contributions. The amount you pay in social security contributions as an unemployed individual depends on your income and assets (securities count towards total assets).

If you register as a self-employed individual with the social security office, you pay contributions to the child benefits scheme and an administrative fee in addition to basic social security contributions. The amount you are required to pay in social security contributions depends on your income.

Pension fund contributions (2a)

The Substitute Occupational Benefit Institution offers occupational pension plans to unemployed and self-employed individuals on a voluntary basis. These allow you to continue contributing to the second pillar or Swiss retirement savings (occupational benefits) as an unemployed or self-employed individual.

Accident insurance

Both unemployed and self-employed individuals can add accident insurance coverage to their compulsory health insurance policies. While this insurance does not provide the loss-of-income insurance which you receive from occupational accident insurance and your health insurance deductible applies, the medical expenses coverage is practically identical.

Private retirement savings (3a)

The biggest advantage of being self-employed as opposed to unemployed is that as a self-employed individual you can contribute to the third pillar of Swiss retirement savings (private savings). You can compare 3a accounts here. Contribution limits for self-employed individuals can be found here.

Conditions for registering as self-employed

There are conditions attached to registering as a self-employed person with the social security office, and not all investors will qualify. Typically, you will be required to prove that you have clients, which will not likely be the case for full-time traders. However, if you want to take advantage of the benefits of registering as self-employed, it may be worth explaining your situation to your cantonal social security office and obtaining more information.

Opening a company

Opening a company (a GmbH, for example) has some benefits, which may or may not be advantageous to you as an investor. For one thing, your company can take you on as an employee, allowing you to benefit from occupational accident insurance. You also have the freedom to join a second pillar pension fund of your choice. Certain categories of companies also limit your financial liability, which is a benefit if you expect to provide services to third-parties.

However, opening a company is rarely attractive from a tax perpective - particularly for full-time traders - because you may pay taxes twice on part of your income (as a company and as an employee). Running a company also involves a fair amount of administrative work. While being able to benefit from the loss-of-income insurance provided by occupational accident insurance is a benefit, the higher taxes and administration associated with running a company will not suit all investors.

Best regards from Moneyguru

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