ESTV

The ESTV (Eidgenössische Steuerverwaltung), or Swiss Federal Tax Administration, is the federal authority responsible for administering direct federal taxes, VAT, and withholding taxes. For prediction market traders, the ESTV's most relevant function is setting the criteria that distinguish private (tax-free) from professional (taxable) securities trading.

ESTV Circular No. 36

The ESTV's key guidance on professional trader status is found in Kreisschreiben Nr. 36 ("Circular No. 36"), which outlines the five criteria used to assess whether an individual's trading activity rises to the level of professional self-employment. These criteria cover holding periods, transaction volumes, leverage, derivative use, and income proportions.

Relevance to prediction markets

The ESTV has not issued specific guidance on prediction market contracts. The classification depends on whether they're treated as securities, derivatives, or gambling — each with different tax consequences under Swiss law.

Cantonal interaction

Switzerland's federal system means that both the ESTV and 26 cantonal tax administrations play a role. The ESTV provides guidelines, but cantonal authorities handle assessment and may interpret criteria differently.

Key ESTV resources for traders

The ESTV publishes several resources relevant to prediction market traders:

• Kreisschreiben Nr. 36: The primary circular on professional vs. private securities trading
• Merkblatt (fact sheets): Guidance on specific topics like cryptocurrency taxation (which may be analogous to prediction markets)
• DA-Kursliste: Official exchange rates for foreign currency conversion in tax declarations

The ESTV website (estv.admin.ch) provides these documents in German, French, and Italian.

Frequently asked questions

Does the ESTV consider prediction market contracts as securities or gambling?

The ESTV has not issued specific guidance. The classification likely depends on the platform: CFTC-regulated contracts (Kalshi) may be treated more like financial instruments, while unregulated platforms could be viewed as gambling. Swiss gambling winnings from licensed operators are tax-free under certain thresholds.

Which canton is most favorable for prediction market traders?

Cantons with lower income tax rates (like Zug, Schwyz, or Nidwalden) are more favorable if you're classified as professional. If you're private, the canton doesn't matter — gains are tax-free regardless. The key is the classification decision, which varies by canton.