@TomTurboInvest

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Question for the Austrian trader community 🇦🇹- Please / Thank you!!! 🥶

My tax advisor pointed out to me today that I need to be careful not to be classified as a commercial trader.

Although there are no fixed thresholds, the tax office decides on the classification based on an overall assessment of the individual case and various indicators.

These would include very high frequency and short-term nature, e.g. day trading, a high volume of transactions. The estimated time required, etc.

Has anyone in the community ever had any points of contact in this regard? From a tax perspective, this would be quite a disadvantage, as the progressive tax rate goes up to 55%.

I would have been better off $ADYEN (-0,38%) from the day before yesterday not sold again today 🙈😂

Thanks for any advice regarding trading and treatment by the tax office. Never had this before, but it came up in the course of the tax settlement of a non-tax-simple broker.

@BamBamInvest
@Smudeo
@7Trader

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52 Comentários

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I've already had this discussion/topic with my tax advisor. For me, however, it was about future trading with leverage. This could be critical as you are trading with borrowed capital and this may fall under commercial trading. Unfortunately, you generally fall under the progressive tax rate.
For normal day trades/swing trades, my tax advisor said that this is not a problem. You are classified as commercial if you trade for others. Or with money from others.

A lot of factors have to come together for you to be classified as a trader, for example if you have a job in finance or something like that.

That was the decision of my tax advisor.

But personally, I'm not too worried about being classified as a commercial business.

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TomTurboInvest@TomTurboInvest

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@Philsn Thanks for the info - I have the advantage that I only trade shares, which makes it safer. I also only trade for my own account, and I don't yet use the margin account that the broker offered me. I've toyed with the idea of trading shares "short" a few times recently, but have still left it alone - probably better this way - cobbler stick to your last!
May I ask which broker you are with? I use Interactive Broker for US stocks, and the tax report was the reason for the discussion.

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Yes, that's true, but I have to say that 90% of my short-term trading is in equities. I've never shorted a position myself😂 Always just long. It's easier for me to recognize an uptrend than a downtrend. I only use Flatex for shares because it's very easy and I haven't wanted to deal with it myself yet. For cryptos I trade on Bitpanda which is my buy and hold investment also because of the tax simplicity. For short-term trades/futures I use Bitget and calculate the taxes via Blockpit and then enter them myself.

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BamBamInvest@BamBamInvest

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No, unfortunately, but I think you have to do a lot of trading and they probably only take the profitable ones who can do it 🤣

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TomTurboInvest@TomTurboInvest

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@BamBamInvest I already have a 5-digit KEST balance this year and many hundreds of trades 🙈
Has never been an issue - I think the savings package sends its regards 🥲

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BamBamInvest@BamBamInvest

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@TomTurboInvest To be honest, I wouldn't worry too much about it, even if you get a fine, it will probably be limited. According to the Austrian philosophy, it's better to carry on and in the worst case, I'll pay the fine 🤣

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TomTurboInvest@TomTurboInvest

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@BamBamInvest I'm more concerned that they don't classify me as a commercial trader, then it's no longer 27.5% but by income.
But I'll let that come to me, I can't trade less either 🤣
PS I'm also in the process of reducing my working hours, one day less😬
Not that all this will be used for "consideration"

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Kate🦋@Iwamoto

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@TomTurboInvest Don't panic. The way it was, the way it is and the way it will be. I don't like this tax consultant. Maybe he's jealous, maybe he's clueless or a combination of both. If you need one at all, I would find someone else. A commercial trader is someone who trades commercially. That's not the case with you. 😇

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TomTurboInvest@TomTurboInvest

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@Iwamoto the tax advisor is ok, I need him for the apartments and that fits perfectly. They have little to do with shares, especially "non-tax-simple brokers", but there are generally few who offer this for many traders. He only pointed this out to me because there is a danger if the tax report only lists transactions for pages on end. The stupid thing about Austria is that there are no clear rules. It's a matter of discretion in individual cases.

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BamBamInvest@BamBamInvest

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@TomTurboInvest I already understood that, but I wouldn't worry so much about that, it must be very bad that they fish you out 😁 Sbet that's exactly what Austria is 🇦🇹 they do what they think is right 😂

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Solitair@Solitair

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@BamBamInvest It's not that simple, there are a few criteria and it's not just decided on a whim. Here, for example, you can read about it: https://findok.bmf.gv.at/findok/volltext(search:standardsearch)?documentId=bc63375d-92f9-457b-8083-59d4545aaae2
Incidentally, the situation is similar in Germany.

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BamBamInvest@BamBamInvest

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@Solitair I meant that rather facetiously, I'm well aware that the people in question take their job first. PS: I can still copy the link from my cell phone 😁

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TomTurboInvest@TomTurboInvest

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@Solitair Thanks for the link - for me, only the number of trades and the volume could be viewed critically. And it was just a hint from the tax advisor that you should be careful with the number of trades - there are already more than 500 in a year - actually not wild. I also received this advice for the first time and thought to myself - ask the community if this has ever happened to anyone.
I think I can find enough arguments to justify doing it privately - albeit quite ambitiously 🙄

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BamBamInvest@BamBamInvest

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@TomTurboInvest Do you actually track them with portfolio performance or something? I imagine it would be very tedious with 500 trades 😊

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Seventrader@7Trader

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So the finance department has to figure it out. For me, every tax is automatically paid by Erste Bank
I have around a hundred transactions every year, but that's probably a long way from commercial. I would probably have to have tens per day.
Do you show your tax advisor the securities account?

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TomTurboInvest@TomTurboInvest

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@7Trader the whole thing is only up for discussion because I have to declare the 2nd non-tax-simple broker via the E1kv in the income declaration, and all transactions are listed in the annual tax report, among other things.
The tax office receives the report from the broker anyway, but I only pay the corresponding tax once a year.
The tax advisor does not know the securities account explicitly, but the report from the 2nd broker also includes all unrealized P&Ls. It's like an annual financial statement. The tax advisor doesn't care how many trades I make, but there is apparently a risk of being classified as such.
I already trade a lot, and as the capital often turns over, the "turnover" is suddenly 7 figures and tens of pages full of transactions with some shares several times in the evening - nice volatile US shares 🤷🏽‍♂️
I'm still relaxed about it, the good thing about no clear rules is that you can still discuss them if the worst comes to the worst. But fortunately it's not that far yet. It could just turn out that way if things go badly. I'm interested to know if anyone has ever been confronted with this issue.

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Seventrader@7Trader

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@TomTurboInvest Hallelujah, I don't have that many transactions by far 😅
It probably depends on the auditor at the tax office. Sometimes the envy of these types also plays a part and then he tries to annoy you.....
Well, let's hope you never get a kiss on the hand.

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This may apply to you:
Offering trading services or trading for the account of others (e.g. prop trading or financial services)
The Austrian tax office checks individually whether the trading activity is to be classified as private or commercial; the overall picture and the intensity of the activity are decisive
https://www.enzinger-stb.at/trading-steuern-in-oesterreich/

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TomTurboInvest@TomTurboInvest

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@Smudeo Thanks for the link. I've already come across Enzinger in my research. Seems to have specialized in tax consulting in this area.

Fortunately, I only trade on my own account, don't do prop trading and also don't use borrowed capital. After the information from the tax consultant, I've been asking around quite a bit over the last few days, and I now see the risk as rather low, as I can prove that I only trade privately, albeit quite a lot compared to the average.

May I ask if you use a non-tax-simple foreign broker? If so, which one? I trade US shares via Interactive Brokers - it's the best I've come across so far for trading.

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@TomTurboInvest I only use local brokers who already pay the tax. So no.

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TomTurboInvest@TomTurboInvest

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@Smudeo Do you also trade directly on American trading venues, or do you only do it via the small ones like Gettex or Tradegate? Or not at all?

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@TomTurboInvest only via stock exchanges

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TomTurboInvest@TomTurboInvest

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@Smudeo I chose IKBR because I have a direct integration in TradingView, trading directly from the chart is something nice. And it's cheap for US stocks. USD account, high liquidity because it's directly on the NYSE, low spread and simply great order types. For example, I can choose whether my orders should only be valid during main trading hours or before/after trading hours, or both. And especially for short-term trades, I can place 3 orders at the same time with one order -> buy, SL and TP, which makes trading very relaxed 😅

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AlphaHoly@AlphaHoly

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Based on my gut feeling, I would say that there can be no commercial activity. There is income from CT and it is irrelevant how often, how high and how profitable these trades are executed. Ultimately, it remains "own asset management".
I have some insight into the FAÖ; if income is generated from the transfer of capital, it is considered income from KV in accordance with §27 EStG or §27a EStG. You would have to pursue a different objective in order to be classified as a business. (I'm thinking of trading for third parties against payment)

However, income from used vehicles would also bring positive things apart from the progressive tax rate.

Your tax advisor probably means too well. 😄

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TomTurboInvest@TomTurboInvest

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@AlphaHoly Thank you for your information. In the course of my investor apartments, I already run a kind of business, so to speak, and make use of some of the positive aspects such as input tax deduction, depreciation, etc..
However, I would like to retain the privately favorable 27.5% taxation in asset management or specifically in my trading activities. After a few days of research, I also think that the actual risk of being classified as "commercial" is rather low.
My tax advisor is very precise, which I also appreciate, although shares and in particular trading with brokers that are not tax-simple are not his specialty according to his own statements.

PS: do you also have experience with foreign brokers through your insights, how exactly are the tax reports, which are usually not Austria-compliant, viewed by the tax office? Fifo vs average price. Whereby I have a very simple setup. Only shares, and with the broker in question I always close the positions completely when the target price is reached, so the issue of average price vs FIFO does not arise, as the entire position always shows the average price anyway.

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AlphaHoly@AlphaHoly

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@TomTurboInvest Please feel free to contact me, I'm happy if I can pass something on 😃
Yes, with the VuV you are slowly introduced to "entrepreneurship" and feel a bit of the privileges of VSt, AfA etc...
Oh, which broker are you talking about? That sounds a bit complex... especially with 100+ trades a year.
I'm afraid that varies depending on the individual case, I could imagine that the majority will take note of the case and trust that you have calculated your declaration data correctly (foreign income from CT is more likely to be "approved" than to be dwelled on for a long time) - it will be interesting in the event of a possible tax audit whether you really don't have to list every trade EK-VK here...

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TomTurboInvest@TomTurboInvest

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@AlphaHoly Thank you for your answer!

My 2nd broker is Interactive Brokers - for trading Mega, but as with almost all of them, the tax reports are based on the FiFo principle. And Austria has once again opted for something else - the average price is relevant for tax purposes. This also has advantages, but unfortunately we never get the right reports.

Listing in itself is not a problem, I record every trade in my Excel anyway - with date, unit, purchase/sales price, exchange rate on the reporting date and use this to calculate the expected tax so that I am not hit by a surprise in the following year and also so that I don't ruin my performance with a mix of gross and net income. I only measure myself against the net profits, regardless of the fact that with Interctive Brokers I receive the full gross profit in advance during the year and can continue to work with the full capital.

I take out the complexity by only trading shares and always closing the entire position at Interactive Brokers. This means that all trades are taxed at 27.5%, and in the P&L report every sale is identical to the average price. The only complex thing is the rather high number of trades - a good 500+ over the year 🤷‍♂️

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AlphaHoly@AlphaHoly

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I hadn't even thought about the fact that Austria is actually going its own way here - I've become smarter again 💡 I must have been completely blinded by our German neighbors, you only hear FIFO all the time 😂

You're really working hard on the documentation, I think you'll make a good impression just in case and the FAÖ will be satisfied with it. You probably don't need to worry about that 👍🏻

Okay, then I also understand why you're sticking with the foreign broker. IB is much more fun than our dusty Flatex.

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TomTurboInvest@TomTurboInvest

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@AlphaHoly I have a bit of an analyst in my DNA 😂

The average price thing gets terribly complicated when you make partial sales, and then buy again, and then make partial sales again. DE has solved this "more simply" with FIFO. For us, the average price in the securities account is relevant for tax purposes. This is also the reason why the GQ performance is not correct for us in such cases, as the cost price at GQ is also calculated according to the FIFO - but I can live with that.

Well and IB is really fun, once you have placed your orders directly in the chart or order book, you don't want to do anything else, at least when trading 🤷‍♂️

And not losing any capital to taxes during the year also helps 😉

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AlphaHoly@AlphaHoly

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Absolutely tedious, as you need to keep a manual list like you do.

I can't add anything more to that. I completely agree with you. Thanks for your information too 🙏

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I have made about 70-90 trades with flatex in 6 months. No problems have occurred so far.
Was in 2021

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TomTurboInvest@TomTurboInvest

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@Igor Thanks for your information - I also have a very high number of trades in my tax-simple main custody account, so nobody cares. The taxes are paid automatically and are not so obvious.
The topic only came up in the course of the tax settlement of the non-tax-simple broker, as I have to state the tax to be paid in my income tax return. And the tax report shows 30 pages + transactions. That could at least attract attention.

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PietAT@Petzi-Port

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I'm going to go out on a limb here, if you trade leverage certificates you are more likely to be classified as a professional trader than a spot buyer.

I just wouldn't overdo it, 5-10 trades a month should be half as wildä

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TomTurboInvest@TomTurboInvest

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@Petzi-Port I stay true to my setup and only trade shares, but a lot of them. 5-10 can happen a day, of course not every day, but there are considerably more in a month or year 😉

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PietAT@Petzi-Port

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@TomTurboInvest you have time for so many trades in addition to your job:)

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TomTurboInvest@TomTurboInvest

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@Petzi-Port I mainly trade US equities, which is ideal for working people. I start at 16:30 to 17:00, so you can already see how the market is moving. But that's no more than 5 hours in total during the week. If the setup is right, then I place my trades, otherwise sometimes not😅

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burnheart@burnheart

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If you invest your own money for your own account, it is basically private asset management and not a commercial activity. You pay KeST on the profits you make.
A number of points are required for it to become a commercial activity: https://www.steuerverein.at/17-einkuenfte-aus-gewerbebetrieb-%C2%A7-23-estg-1988-teil-1/#:~:text=Nahezu%20jede%20(private)%20asset%20management%20and%20participation%20in%20commercial%20traffic.&text=The%20criterion%20of%20asset%20management%20is%20the%20commercial%20activity%20of%20a%C3%9business%20income%20type.

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Peace@Pinkafeld

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Do you live from trading or are you employed? To get to the 55% personal tax rate, you really have to earn a lot from trading. If you still realize losses, I don't think it will affect you.

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TomTurboInvest@TomTurboInvest

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@Pinkafeld I am employed, trading is just a hobby, but brings in a monthly income in the lower/middle 4-digit net range. In addition, the capital from trading has flowed into concrete gold from time to time, so there is also something coming in. I am currently at 48% with my income, so trading is taxed at a low flat rate of 27.5%.

PS: I'm currently on the train to Vienna and I'm already thinking about today's trades😅

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TomTurboInvest@TomTurboInvest

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@Pinkafeld Of course, there are always losing trades, but the KEST balance is already in the 5-digit plus😬 range this year
And then there's the additional taxation from the non-tax-simple broker.
But I don't invest more than 5 hours a week in my hobby. I also have a job plus family 😁

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Peace@Pinkafeld

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@TomTurboInvest I have a similar situation. The capital from the concrete gold flows into my trading fun. But I trade 1-2 times a month.

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TomTurboInvest@TomTurboInvest

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@Pinkafeld I already make 500+ trades per year, but I'm more of a short-term trader. The majority of my trades are closed between +5 and +10%, but with a high frequency - according to the motto "small cattle also make crap"
It's just easier to make 5-10% very often than to park the capital for a long time and wait until a position reaches 100%.
Congratulations on the concrete gold, it smooths out the portfolio, it doesn't care about Trump, tariffs or other turmoil 😀

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Peace@Pinkafeld

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Which broker do you have?

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TomTurboInvest@TomTurboInvest

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@Pinkafeld I've had my main custody account with Easybank since 2007, and for US shares I use Interactive Brokers!
I'm a bit of a chart analyst, and IB is a good choice because it's integrated with TradingView.
Easybank now also has integration with Stock3 for trading, but that's still too weak for chart analysis.

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Peace@Pinkafeld

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@TomTurboInvest Easybank is already very expensive. You haven't tried Trade Republic yet?

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TomTurboInvest@TomTurboInvest

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@Pinkafeld I've been with easybank since 2007 and still have an old contract - it was called Easybroker plus.
I pay no fees for the clearing account and €0.80 per trade.
It always pays to call easybank and ask for a good rate. There are currently also good offers for young people - it's only available up to 27, which is no longer possible for me😅
But a lot of things are free with the Young Investor Depot. Post then something for my kids.
I haven't tried TR yet, with easy I have the advantage that I also have my current account and overnight money, which means I'm always liquid for trading because I can juggle between the accounts in seconds.
That's worth something to me. I've never had any problems in over 20 years, and I also have many trading venues for emergencies, but foreign ones are more expensive, hence IB for US shares

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Peace@Pinkafeld

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@TomTurboInvest Thanks for the info. Too late for me and I'm too old.

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TomTurboInvest@TomTurboInvest

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@Pinkafeld do you have TR? Until recently, it wasn't tax-simple either. How did you deal with the tax office when filing your income tax return?
Did the tax office simply accept the values in the E1Kv form, or did you have to submit details?

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