In the first part of our Switzerland series we already covered the legal framework of cryptocurrencies in the Swiss cantons of Zurich, Bern and Lucerne. In this post, we will examine the current legal situation in Zug, Basel an Aargau.
Zug is also known as Crypto-Valley due to the fact that it's the birthplace of Ethereum. Therefore, the legal framework in the canton is very rather beneficial for cryptocurrency users. Any cryptocurrencies have to be declared as 'other funds' in the directory and are subject to wealth tax. The official market values issued by the ESTV (the Swiss Federal Tax Administration) for cryptocurrencies have to be taken into account as well.If cryptocurrency is used as a form of payment or wage, they are subject to regular income tax and have to be declared on the salary statement. This also includes any realized gains made through mining or trading. Capital gains made through immovable private assets remain tax-free and; however, losses can not simply be deducted. For legal entities though, capital gains are taxed but losses can be deducted. If cryptocurrencies are part of a company's assets they are subject to principle of book-value (capital gains made from assets are taxed as income). On a side note: Since January of 2018, a part of the canton's taxes can already be paid for in Bitcoin.
Any funds stored in cryptocurrency are subject to wealth tax in Basel. They fall into the category of 'other values' and are considered movable assets. Any investments made through Bitcoin have to be declared in the securities depository. Like in Zug, any capital gains made through Bitcoin and co. remain tax-free. Aside from that, cryptocurrencies as part of a company's assets are subject to the principle of book-value. Capital gains are taxed and losses can be deducted. If a person receives salary or income in the form of cryptocurrency it is subject to regular income tax rates, which also includes mining.
Just like in the before mentioned cantons, Aargau requires any assets or funds in the form of cryptocurrency to be declared as 'other funds' in the securities directory and files them under wealth tax. Income tax only applies when employees receive their wage or salary in the form of Bitcoin and co. Mining also counts as a form of income. Capital gains made from movable private assets, like cryptocurrencies, are not taxed. For legal entities though, capital gains are taxed, but the losses can be deducted. Tokens count as a form of digital forms of value and in case of smart contracts that come with specific rights, it is highly advised to look at the token's individual characteristics to determine proper taxation.
Tax Rates for Individuals (2019)
Income tax ranges between 22% to 44% in 2019 and depends on the canton, the amount of income and other demographical factors of the individual, like marital status and confession. The Swiss average income tax is at 34%.
- Zug has the lowest tax rate of the all Swiss cantons with just 22%.
- Basel-City is in the upper third at 37.3%.
- Aargau is at an average of 34.3%.
Wealth tax in Switzerland can reach up to 10 per mille and, again, depends on demographical factors and the canton's rate.
- Zug has a tax-exemption limit of 100.000 CHF for individuals and taxes wealth at max. 2 ‰.
- Basel-City has a limit of 75.000 CHF and a rate of max. 8 ‰.
- Aargau has a limit of 100.000 CHF and taxes wealth at a relatively low rate of max. 2,1 ‰.
Tax Rates for Companies (2019)
Corporate tax ranges between 12% to 24%, depending on the canton. The Swiss average is at 17%.
- Zug is at a rate of 14.3%.
- Basel-City taxes companies a little lower at 13%.
- Aargau has the highest corporate tax rate of the three at 18.6%.
The exact tax rates for individuals and companies are published every year on the canton's websites and it is therefore highly advised to contact the corresponding tax authority of the canton for further information on the issue.
Switzerland offers a robust overall situation and a fair legal framework for the treatment of cryptocurrencies, which is why many crypto-based companies have their headquarters in the tiny country. The Ethereum Foundation and even Facebook's Libra Association call Switzerland their home. The canton of Zug is even known as 'crypto-valley' and part of the taxes there can already be paid for in Bitcoin.
The progressive way of dealing with taxation and beneficial tax rates for companies make Switzerland one of the most important places in the crypto-sphere.
Disclaimer: The information provided in this blog post is for general information purposes only. The information was completed to the best of our knowledge and does not claim either correctness or accuracy. We highly recommend contacting a certified legal advisor in the country.
Clarity on Swiss Taxes von KPMG (2019).
EStV (2019). https://www.estv.admin.ch/dam/estv/de/dokumente/allgemein/Dokumentation/Publikationen/kantonsblatt/AG_de.pdf.download.pdf/AG_de.pdf
EStV (2019). https://www.estv.admin.ch/dam/estv/de/dokumente/allgemein/Dokumentation/Publikationen/kantonsblatt/BS_de.pdf.download.pdf/BS_de.pdf