Swiss Stamp Tax Duty – All you need to know
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If you have been investing in Switzerland, you probably have heard about the Swiss Stamp Tax or the Swiss Stamp Duty. This Stamp Tax is a tax your broker collects when you do certain transactions on the stock market.
Even though this stamp tax is straightforward to understand, there is a lot of confusion. Therefore, I wanted to cover the tax in detail to dispel the confusion once and for all.
When investing in the stock market, it is important to cut down the fees. If you are a Swiss investor, it is essential to know the Stamp Tax and especially understand how to avoid this tax! Because, as we will see, there is a way to avoid this tax!
I have saved quite a lot of money by not paying this tax these last few years.
Swiss Stamp Duty Tax
The Swiss Stamp Duty is a tax levied by the federal tax administration on stock market transactions. It is a tax on the transfer of securities.
As a side note, we will focus on securities on the stock market in this article. But there is a similar tax on real estate and insurance policies.
You will have to pay this tax on each purchase and sale of shares, bonds, ETFs, and other securities. Your broker will automatically deduct the stamp tax from the transaction. So, this tax is direct, and you do not have to do anything in your tax declaration with it.
How much Swiss Tamp Tax you will pay will depend on whether you are trading on a Swiss Stock Exchange or a foreign one:
- For a transaction on a Swiss Stock Exchange, you will pay 0.075% of the transaction value.
- For a transaction on a Foreign Stock Exchange, you will pay 0.15% of the transaction value.
So, you pay twice more on a foreign stock exchange than the Swiss Stock Exchange.
And do not forget that you will have to pay this tax again when you sell the securities. So for each of your shares on Swiss stock exchanges, you will pay 0.15% and 0.30% on each share from a foreign stock exchange. And the tax when you sell is likely to be higher since your shares will have (hopefully!) appreciated between the time you buy and sell.
If you only buy once to invest and sell when you need the money many years later, this tax will not weigh heavily on your fees. But if you need to rebalance your portfolio, you must pay for it. And if you need to switch to a new ETF, it could be costly.
This tax may not seem like a lot, but it is not negligible. If you want to sell 50’000 CHF of Swiss shares, you will pay 37.50 CHF in fees. And you will pay twice more if these shares are from a foreign stock exchange. This tax can quickly add up to a significant amount over the years.
If you want to look at the official information about this tax, you can read the official page on Tax on securities and insurance premiums.
Examples of Swiss Stamp Tax
To understand how much Stamp Tax you will pay, we can run a few examples:
| Operation | Share | Stamp Tax |
|---|---|---|
| Buy 1’000 CHF | Swiss share | 0.75 CHF |
| Buy 1’000 CHF | Foreign share | 1.50 CHF |
| Sell 5’000 CHF | Swiss share | 3.75 CHF |
| Sell 5’000 CHF | Foreign share | 7.50 CHF |
| Buy 20’000 CHF | Swiss share | 15 CHF |
| Buy 20’000 CHF | Foreign share | 30 CHF |
These fees are not large numbers. But they still add up, month after month, if you are investing regularly.
We can imagine a scenario where you invest 5000 CHF every month. 1000 CHF goes to Swiss shares, and 4000 to foreign shares. Here is what you will pay:
- 6.75 CHF per month
- 81 CHF per year
- 810 CHF after ten years
It does not seem like much per month, but you have wasted nearly 1000 CHF after ten years. If we can, it is better to avoid paying these kinds of taxes.
And do not forget that you will need to pay the tax again when you sell the shares. If you need to sell shares for one million CHF during your retirement, you must pay between 750 CHF and 1500 CHF. And this will go even higher if you have a more substantial portfolio.
So, we should see if we can avoid the Swiss Stamp Tax!
How to avoid the Swiss Stamp Duty Tax?
Fortunately, we can avoid this tax entirely by using a non-Swiss broker.
Indeed, the government only levies this tax when security dealers are involved in the transactions. And since 2010, Swiss law does not consider foreign brokers as securities dealers.
This difference effectively means that by using a foreign (non-Swiss) broker like Interactive Brokers, you will save up to 0.15% on each transaction!
In my opinion, this law is quite stupid. I understand the need for the government to levy taxes. But this does a massive disservice to Swiss brokers. They are already expensive, but they are even less interesting to consider as a good broker with this law. This tax efficiency is one of the reasons why the Best Brokers in Switzerland are foreign brokers.
If it made sense, I would prefer using a Swiss broker. But mathematically, it simply does not make sense.
Use Contracts for Difference
Just for completeness, I want to mention the other way to avoid the Swiss Stamp Tax: Using Contracts for Difference (CFDs). Indeed, the Swiss Stamp Tax is not levied on CFD trading.
Now, I strongly advise against trading with CFDs. They are among the riskiest of investing instruments. CFDs are the investing instrument where people are losing the most money. In practice, more than 75% of people using CFDs are losing money!
CFDs are a form of derivatives with which you can bet on the future development of underlying assets such as stocks. They can have a lot of margin (leverage) and are loosely regulated since they are not traded directly on stock exchanges but over the counter.
Again, I just wanted to mention CFDs for completeness, not to encourage you to use them. I have never traded with CFDs, and I never intend to. Simple passive investors do not need such complicated instruments to invest successfully.
Conclusion
You should now know everything you need to know about the Swiss Stamp Tax (or Swiss Stamp Duty). It is simple to understand this tax. But it is essential to understand it since you will likely have to pay for many years if you invest in the stock market.
If you are using a Swiss broker, there is little you can do about this tax.
On the other hand, foreign (non-Swiss) brokers are exempted from this tax. This exemption means that you can save money on your transactions by using a foreign broker like DEGIRO or Interactive Brokers. And since these brokers have other advantages, it is difficult for Swiss brokers to compete.
Capital gains taxes in Switzerland is something else that many people do not understand. Find out all about capital gains and taxes in Switzerland.
Did I forget anything about the Swiss Stamp Tax?
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Hi
First thank you for your very complete site and infos
Is it legal to use foreign brokers when you are a swiss resident?
What happens when you declare a foreign broker account to the swiss tax authorities?
how do you declare your assets without the FISCAL declaration document ( that all swiss brokers do)
It is legal. At least many expats do that, and I’ve been doing that for 6+ years.
In ZH tax autorities are okay with statement which Interactive Broker provides.
Most importantly you just need to declare all dividends and pay the taxes.
Hi
Yes, it’s perfectly legal. But you have to declare everything on your tax declaration.
You can use a report from your foreign broker in your tax declaration, that’s not an issue.
I have one question about this stamp duty tax.
It is clear it is applicable when you buy or sell a Swiss stock/ETF or Foreign stock/ETF using a Swiss broker (Swissquote, Saxo, Cornertrader etc).
However, what is the law when securities are transferred from one foreight broker to another broker which is Swiss. For example IB to SQ or IB to Saxo?
It somehow feels that people are exempted from this tax if they buy securities with one broker and trasnfer to another. But is it really the case? OR Swiss broker will need to capture stamp duties in case of incoming transfer of securities?
I am not able to find clear information about this.
yes, I do this. It takes 1-2 weeks to transfer, so I do it once a year IB->SQ.
Thanks for your comment.
Just to be sure. You mean that there is no fees/duties etc to transfer share from IB to SQ?
(cannot reply to your deeper comment)
Assuming you buy outside of CH-Brokers (for example in US and probably EU, but I go only with US) and transfer that to SQ you will completely avoid stamp tax and yet keep stocks on a Swiss broker.
– SQ will not charge you for that. In fact for new accounts they can even reimburse you 500 CHF. Because they get a new customer + you’ll start paying them 20-50 CHF/month for custody fee
– I think IB does not charge you anything. I don’t see any fee neither in their prospects nor in my reports. But other brokers may charge 25-50$, so it’s not huge worst case.
If you transfer OUT of SQ, then you’ll have to pay 100$ per position – again, not huge on large scale. But still, don’t transfer different ETFs to SQ, preferably keep 1-2, like VOO or VTI or VT or VWRL.
I keep many ETFs on IB, but trasfer most of my VT to SQ to sleep slightly better.
Typo, I meant “outside of CH-exchanges” (i.e., SIX).
If you buy SIX:VWRL @ IB – you’ll still pay Stamp Tax.
Thanks for your quick response
Exactly my plan. Most likely VT or VTI from IB to Saxo… once a year and that’s it
Dear Vanya
I have one question. It seems that in order to get access to US ETFs, the Swiss brokers ask retail clients to upgrade to « qualified investor » .
It is also the case for SQ? I am asking because you already have account at SQ.
If yes, are there any tax implications to be qualified as « qualified investor » vs a normal retail client?
Hi Abhiney
I think that in this case, the Swiss broker will not levy the tax. As far as I know, it only applies to buy and sell operations, not to transfer operations.
Since the shares were bought with a foreign broker, the tax is not due.
As you correctly stated these taxes make Swiss banks and brokers uncompetitive. Why Swiss politicians fail to understand this is beyond comprehension.
I think it’s simply because it makes money for the government and many people use Swiss brokers regardless of their fees because they feel more at ease with it.