Capital gain tax -- "Professional investor" status

[Pikachu]

Hello,

As mentioned in that article: https://thepoorswiss.com/capital-gains-switzerland, the first rule states that an investor should hold securities for at least six months.

Let's assume I bought Apple stock at different times:

• 1 lot of 500 pieces 8 months ago
• 1 lot of 250 pieces 1 month ago
• I also get a regular lot of 10 pieces every month as part of compensation by employment for the last 2 years.

With that assumption, I have a few questions:

1. If I sell those 500 pieces of stock + 10 pieces of stock * (24 - 6 = 18) months that I received earlier than 6 months ago but not a lot (250) from a month ago, would it be a breakage of that rule? If I understand correctly, Interactive Brokers allows me to select exactly which lots to sell.
2. If I keep selling lots that I get as part of compensation without holding them for 6 months, does it break that rule either? In that case I'm not really investing because I never bought a stock myself, it's just part of the income.
3. If after selling Apple stocks that I held for more than 6 months, I immediately (let's say a day later) rebuy a similar amount of that stock, would it count under breaking this or other rules? From what I understand the first rule does not mention anything about buying?
4. Should I be aware of anything else here?

 

[Baptiste Wicht]

Welcome to the forum @Pikachu

Overall, if these shares are part of your compensation (like RSU), I don't think the rules apply because you have not bought them, but have received them from your company. When I receive stocks from my employer as RSU, I usually sell them earlier than 6 months and I expect there would be no issue. These shares are taxed as income anyway.

1. Same here, if you received the 10 from compensation, you have never bought them.
2. If you have never bought them, I don't think you can break the rule.
3. I think you can safely do that without breaking the first rule, but this may increase your volume and this counts towards one of the 5 rules.

 

[Pikachu]

Thank you @Baptiste Wicht for taking time to answer my questions but I need some more clarification.

1. Same here, if you received the 10 from compensation, you have never bought them.
2. If you have never bought them, I don't think you can break the rule.

Maybe it wasn't clear enough in the question but I think you misread the context. In this case I have Apple stock coming from different sources:

• Buying myself: 1 lot bought more than 6 months ago and 1 lot bought less than 6 months = 750 quantity
• Received as part of income: 10 pieces x 24 months = 240 quantity

Questions:
a.) When selling this stock I assume it's my obligation to properly choose selling lots in IBKR as explained in: https://www.interactivebrokers.com/en/trading/tax-optimizer.php? Otherwise, it could sell stocks from the 1 lot that I bought a month ago and which does not come as part of income -- hence violating the 6 months rule. So in this case I could safely sell: 500 (bought >6months) + 10x24 (240 received as part of income).

b.) If I understand correctly, I could regularly buy the same stock every month and after 6 months I could start selling regularly the same stock every month, for example:
1st January: buy 10 Apple pieces
1st February: buy 10 Apple pieces
1st March: buy 10 Apple pieces
1st April: buy 10 Apple pieces
1st May: buy 10 Apple pieces
1st June: buy 10 Apple pieces
1st July: buy 10 Apple pieces
30th July: sell 10 Apple pieces (choosing January lot)
1st August: buy 10 Apple pieces
30th August: sell 10 Apple pieces (choosing February lot)
1st September: buy 10 Apple pieces
30th September: sell 10 Apple pieces (choosing March lot)
1st October: buy 10 pieces
...
This should not violate the 6 months holding rule even though this is the same stock in all transactions, right?

3. I think you can safely do that without breaking the first rule, but this may increase your volume and this counts towards one of the 5 rules.

This rule in your article states "The total volume of transactions (purchases and sales) of a private investor does not account for more than five times the value of the investment portfolio at the beginning of the tax period."

Questions:
c.) Does the total volume of transactions include CHF to USD conversions (this could be classified as buy of USD, or sell of CHF)?

d.) Does the total value of the investment portfolio include uninvested cash? Example: 300k USD invested, 100k cash. Is the value 300k or 400k in such a case?

 

[Baptiste Wicht]

Keep in mind that if you want the definite answer, you should consult a tax professional or somebody from the tax office. And if we are not talking about a significant amount of capital gains, relative to your income, you are likely overthinking it. You could also not sell the lots you have bought yourselves.

If you are also selling yourself, this becomes more complicated indeed and you may have to be selective about the lots you are selling. And you may use the Tax Optimizer for that, but I have never touched this and never did anything with lots on IB.

This should not violate the 6 months holding rule even though this is the same stock in all transactions, right?

In theory, that could work as long as you can prove you are using the proper lots

c.) Does the total volume of transactions include CHF to USD conversions (this could be classified as buy of USD, or sell of CHF)?

I am not sure, but I would expect that FOREX counts as transactions.

d.) Does the total value of the investment portfolio include uninvested cash? Example: 300k USD invested, 100k cash. Is the value 300k or 400k in such a case?

I do not know.