Swiss Tax Deductions for Investors Explained

Private investors can deduct certain costs for the general management of securities from their taxable income. This applies to investments in stocks, bonds, options, mutual funds, index funds, and exchange-traded funds. With the exception of negative interest, they do not apply to bank accounts like personal accounts, current accounts, and savings accounts. This tax deduction applies to the direct federal tax, and to cantonal taxes in all cantons. However, the rules vary between cantons. Normally, the cantonal rules also apply to the direct federal tax.

Article 30 of the tax law of the canton of Zurich indicates that you can deduct the costs of having your wealth managed by third parties, and foreign withholding taxes that cannot be reclaimed. However, Article 33 of the same law rules out tax deductions for expenses related to creating, building, and multiplying wealth. Other cantonal laws are formulated in a similar way. In this guide, moneyland.ch translates the legal jargon and explains what the tax deduction for investment costs actually means for you as an investor.

Which investment costs are tax deductible?

These investments costs related to banks, stock brokers, asset management services, and robo advisors can normally be deducted from your taxable income:

• Custody fees.
• The cost of annual securities statements for tax returns.
• Reimbursement applications for foreign withholding taxes.
• Rental fees for safe deposit boxes.
• Charges for redeeming coupons (dividends).
• Transfer fees for transferring a securities portfolio to a different bank.
• Negative interest charged on bank account balances.

These deductions are largely identical across cantons.

Which investment costs are not tax deductible?

Costs that cannot be deducted from your taxable income include:

• Fees for buying and selling securities (brokerage fees, commissions).
• Stamp duties for securities transactions.
• Stamp duties for the issuing of new securities.
• Sales commissions.
• Compensation paid to fiduciaries.
• Expenses for financial and investment advisory.
• The costs of bank packages which include services that are not part of asset management (like credit cards, fee-free cash withdrawals, insurance, lost and found services for keys, concierge services, and lounge access).

There are no substantial differences between cantons in this regard.

The costs of managing pillar 3a assets also are not tax deductible. However, there is a separate tax deduction with which you can deduct contributions you make to your pillar 3a in full, up to the annual limit.

How can I claim tax deductions for investments in my tax returns?

Typically, deductions can either be made as a flat rate deduction – without proof of the actual costs – or as an effective deduction based on the actual costs.

How high are the tax deductions for investments?

The size of this tax deduction varies between cantons.

• In the canton of Zurich, you can deduct investment costs at a flat rate of 3 permille of the value of securities being managed by third parties. The deduction is limited to a maximum of 6000 francs per year.
• In the canton of St. Gallen, the flat rate is 2 permille for the portion of your portfolio that falls below 3 million francs, and 1 permille for the portion above 3 million francs. The maximum tax deduction is 15,000 francs per year.
• In the canton of Lucerne, the flat rate is 3 permille for the portion of your portfolio that falls below 3 million francs, and 1 permille for the portion that falls above that threshold. The tax deduction cannot exceed your annual returns.
• In the canton of Basel-Stadt, the flat rate is 3 permille, regardless of the size of your portfolio.
• In the canton of Solothurn, the flat rate is 3 permille for the portion of your portfolio that does not exceed 2 million francs in value, and 1.5 permille for the part which exceeds that threshold. The highest possible tax deduction is 15,000 francs per year. If the effective costs, as per submitted documents, are lower than the flat rate deduction, then you can only deduct your effective investment costs.

You can find the exact deductions and rules applicable in your canton by consulting the tax guide and associated tax information provided by your local tax administration. You can also inquire directly at the tax office, or consult a tax advisor.

What should I pay attention to when deducting my actual investment costs?

If your actual investment costs are higher than the deduction you would get by using the flat rate, then you will typically have the option of deducting your actual costs. However, it can be difficult to clearly differentiate between deductible and non-deductible costs. The reason for that is that many service providers bundle a number of different financial and investment services in their packages. Many cantons will not let you deduct your actual investment costs if the line between deductible and non-deductible services is not clear enough.

If you want to claim a tax deduction based on your actual investment expenses, you have to submit documents proving these expenses.

What should I pay attention to if I use an asset management service with a flat fee?

If you pay a flat fee for asset management, it often is not possible to separate deductible costs from non-deductible costs. In the canton of St. Gallen, you only have the option of claiming the flat tax deduction in this case. You cannot choose to deduct the actual costs.

Other rules apply in other cantons. In the canton of Zurich, the actual, tax-deductible costs can be estimated. These two options are available:

• 3 permille of the value of your portfolio, if your portfolio is worth no more than 2 million francs.
• If your portfolio is worth over 2 million francs, you can deduct 6000 francs, plus half of the remaining cost of flat asset management fees. The tax deduction cannot be higher than the sum of 2 permille of your portfolio’s value, plus 2000 francs.

The information in this article applies to private individuals. Note that moneyland.ch is not a legal advisor. Information is provided for educational purposes only, and should not be considered legal advice. If you have questions about taxes, contact the tax administration or consult a tax advisor.

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