How are shares taxed in Switzerland?

How should I go about declaring my shares on my Swiss tax return? Are there any tax deductions which apply to shares? How is the value of shares calculated for Swiss tax purposes?

Greetings,

The value of shares is only relevant in wealth tax calculations.

However, dividends earned from shares must be declared as taxable income for income tax purposes. This applies to distributions (cumulative returns) from ETF investments as well.

Gains earned through gains in the value of shares, on the other hand, are normally tax free. Exception: If you are classified as a professional investor for tax puposes (this can happen when you make frequent stock trades), you will have to pay tax on rate-based gains as well.

Best regards from Moneyguru

More on this topic:
Swiss taxes on stock trading explained

Does a Swiss foreign resident with a private investment portfolio of equities that generates dividends have to pay income taxes on the dividends, even if they are directly reinvested into the accumulated portfolio and never actually transferred as cash income to the person? Are the reinvested dividends in any way subject to income tax? Should the person pay tax on a portion of the reinvested income? I assume tax is only paid if and when dividends are actually paid out to the investor, correct? Otherwise dividends that remain in the invested funds are part of capital gains which is tax exempt.

Thank you in advance for clarifying.

Hi Richard

Persons living in Switzerland have to pay income tax on paid out dividends as well as on reinvested dividends (for example in the case of an ETF which reinvests dividends). The Swiss state does not differentiate between paid out and reinvested dividends, otherwise investors who reinvest dividends could avoid taxation.

Best wishes

Milton

Hi Milton,

Many thanks for your answer. Is there a fixed tax rate on dividends or do they get accumulated with the person's other income to determine the rate?

Just to be sure, capital gains of shares in a private investment portfolio are tax-free, but reinvested dividends from those shares are taxable as income even if they are never are cashed out, correct?

Thanks and best wishes,

Richard

Hi Richard

Payed out or accumulated dividends are added to the employee’s taxable income.

Yes, capital gains are generally tax free, unless you are a so-called professional investor.

You can find the definition of a «professional investor» in the file “Gewerbsmässiger Wertschriftenhandel” here:

https://www.estv.admin.ch/estv/de/home/direkte-bundessteuer/direkte-bundessteuer/fachinformationen/kreisschreiben.html

Best wishes

Milton