Wine inside a Swiss patrimony.

Family offices in Geneva and Zürich are asked about wine regularly, usually by a principal who has just bought some. The honest answer has three parts: what the Swiss tax position is, what it really costs to hold, and why the asset is not what it is often presented as. We sell wine, so treat the third part as a disclosure.

The Swiss tax position

General information, not advice, and cantonal practice varies.

Capital gains. For a Swiss-resident private individual, gains on the sale of private movable property are generally not subject to income tax. A cellar held privately normally falls there. The treatment changes if the activity looks like commercial dealing rather than private asset management, which turns on frequency of transactions, use of borrowing, and whether purchases are systematically made for resale.

Wealth tax. Switzerland levies an annual cantonal and communal wealth tax on worldwide movable assets. A valuable cellar forms part of your taxable wealth whether or not you sell it, and unlike a painting on the wall it is usually straightforward to value.

VAT. 8.1% on import, unless the wine is held under bond, in which case it is deferred. That is the subject of the note on importing.

Inheritance. Cantonal, and in most cantons direct descendants pay little or nothing. A cellar passes as movable property and, in practice, passes far more easily than real estate.

What it costs to hold

Four running costs, all of which are ignored in most comparisons of wine against financial assets.

• Storage. Professional storage is charged per case per year. Over twenty years the cumulative figure is

material against the purchase price of ordinary bottles, and negligible against a great one. See the note on bonded storage.

• Insurance. At agreed value, which needs a current inventory and periodic revaluation.
• No income. A cellar produces nothing while you hold it. The entire return, if there is one, is at the

end.

• Transaction cost on exit. The auction spread between what a buyer pays and what a seller receives runs

to roughly a third. On a private sale it is less. The arithmetic is in the note on selling.

The honest case against

Four objections we would raise ourselves.

It is illiquid. Selling well takes months. Selling in a week means selling to the trade at a trade price.

Condition can fail silently. A financial asset does not spoil. A cellar can lose a great deal of value to a failed cooling unit over one August, and nothing on the outside of the bottle says so until the level drops.

The published market is narrow. The indices cover cases of recent vintages of a few hundred wines. Most of what a real cellar holds is outside them, which means no daily mark and no reliable comparable. That is the subject of the note on single bottles.

Fashion moves. Regions rise and fall over decades. Some names that dominated collections thirty years ago are worth less in real terms today, and nothing guarantees that today's will not do the same.

The case for, put plainly

Set against that, four real properties.

It is uncorrelated with financial markets, because the buyers are individuals spending discretionary money rather than institutions rebalancing. It is portable and divisible: a cellar can be sold one bottle at a time, across borders, without a market maker. It is tax-efficient in Switzerland for a private holder, on the treatment set out above. And it is the only asset in a portfolio that can be opened and drunk, which sounds frivolous and is in fact the point: the downside case for a great bottle is a very good evening.