- Meet the 5 conditions below and your private investor status is guaranteed.
- Missing one does not make you a professional: the tax office then looks at the whole of your activity.
- What counts is not your situation (FIRE, unemployment, sabbatical), but the way you invest.
The 5 safe-harbour conditions
If you meet all five at the same time, the FTA treats you as a private investor without further review: your capital gains remain tax-free.
| Condition | What it requires |
|---|---|
| 1. Holding period | You keep your securities at least 6 months before selling |
| 2. Volume | The year's purchases and sales do not exceed 5 times the portfolio value at the start of the year |
| 3. Share of income | Your capital gains are less than 50% of your net income for the year |
| 4. Financing | No buying on credit, or else the portfolio income covers the interest |
| 5. Derivatives | Only to hedge your own positions, not to speculate |
An investor who buys ETFs every month and keeps them for years meets all five without thinking about it.
If you miss one
The automatic protection falls away, but you do not become a professional for all that. The tax office makes an overall assessment: frequency, holding period, leverage, use of derivatives, link with your job, share of gains in your income.
Leverage: buying securities on credit, on margin or with CFDs. Combined with frequent trades, it is the typical profile of a professional dealer.
Five concrete situations
A FIRE, a period of unemployment or one large isolated sale generally pose no problem; frequent leveraged trading does. The detail, case by case:
Five situations, and the likely assessment
| Situation | Likely assessment |
|---|---|
| FIRE at 45, ETF portfolio, 3 to 6 sales a year to live on | Private investor. Gains probably exceed 50% of income, but nothing else raises a flag |
| 8 months unemployed, 15 trades to rebalance | Private investor. Volume and holding period stay within the conditions |
| Sabbatical, sale of an inherited CHF 200'000 position to diversify | Private investor. One isolated transaction, even a large one, is not an activity |
| Swing trading, 1 to 3 trades a week, horizon of a few weeks | Grey zone. Holding period and volume outside the conditions: trade less often |
| CFDs with ×5 leverage, intraday positions, only source of income | Reclassification likely if audited |
What reclassification costs
Your capital gains become self-employment income, with three consequences:
- taxed as income, at your marginal rate
- subject to self-employed AHV contributions
- with a possible supplementary assessment up to 10 years back
Dividends do not change: they were already taxed. The normal tax framework is in investing in Switzerland.
Going further: ask for a ruling
If your situation is ambiguous, you can describe how you invest to your canton's tax administration and get written confirmation of your status. This is useful if:
- you will live solely off your portfolio for years
- you have used leverage in the past
- you use options or futures, even occasionally
- you often sell positions held for less than 6 months
Taxed at source? These rules matter as soon as you file a full tax return, which large investment income often makes compulsory: see the B permit guide.
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Frequently asked questions
What are the 5 conditions of FTA circular no. 36?
A holding period of at least 6 months, an annual transaction volume of at most 5 times the portfolio at the start of the year, capital gains below 50% of net income, no borrowing (or portfolio income that covers the interest), and derivatives used only to hedge your positions. If all five are met, you are a private investor, no questions asked.
I live off my investments since my FIRE. Is that a problem?
Not necessarily. Your gains probably exceed 50% of your income, so the automatic protection no longer applies, but that does not make you a professional. The tax office then looks at the whole picture: without leverage, without speculative derivatives and with securities held for a long time, reclassification is very unlikely.
I rebalanced a lot while unemployed. Is that risky?
Rarely. As long as the year's volume stays below 5 times your portfolio and you hold your positions for more than 6 months, you stay within the safe-harbour conditions.
Does leverage change anything?
Yes, it is one of the strongest signals. Buying securities on credit, on margin or through CFDs, without the portfolio income covering the interest, takes you out of the protection and weighs heavily in the assessment.
What happens if I am reclassified?
Your capital gains become self-employment income: taxed, and subject to AHV contributions. Dividends were already taxed anyway.
Can the tax office go back over past years?
Yes, up to 10 years back in the case of a supplementary assessment (DBG art. 152). Hence the value of consistent investing behaviour over time.
Sources: FTA, circular no. 36 of 27 July 2012, professional securities trading ; DBG / LIFD art. 16 para. 3, art. 18 and art. 152 ; Federal Supreme Court case law on professional securities trading ; AHVG / LAVS art. 9.