Delineation between asset management and independent professional activity

In Switzerland, capital gains from private assets can be tax-free unless they originate from a self-employed activity.

2018

Delineation between asset management and independent professional activity

In Switzerland, capital gains from the sale of private assets are tax-exempt, as long as it occurs within the scope of asset management. Under certain conditions, however, this can also be classified as independent gainful activity. If this is the case, income tax is due on the capital gain.

The Legal Standards

‍According to Art. 16 para. 3 of the Federal Act on Direct Federal Taxation (DBG), a capital gain realized from the disposal of private assets is exempt from income tax. This is only the case as long as it occurs within the scope of asset management. However, if it is concluded that it represents an independent gainful activity, income tax is owed on the realized gain (Art. 18 para. 2 DBG). It does not matter whether the independent gainful activity is main or secondary. It is also irrelevant whether the independent gainful activity is temporary or permanent.

‍The Criteria for Distinction

‍The distinction between private asset management and independent gainful activity can be difficult. The Federal Court defined in its jurisprudence those activities as independent gainful activities in which one:

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