In Switzerland the individual provinces, so-called cantons, are obligated to levy income tax and wealth tax on the total property (assets and rights with a cash value) of taxpayers that are resident in said canton. Tax rates vary between the individual cantons. The Swiss Federal Tax Administration (SFTA) considers cryptocurrencies to be assets: they are subject to the Swiss wealth tax and must be declared on annual tax returns. Cryptocurrencies are treated like foreign currencies for wealth tax purposes.
Cryptocurrency taxes for individuals in Switzerland
Hodlers of Bitcoins or other cryptocurrencies are taxed at the rate determined by the tax authorities on December 31st of the fiscal year. For example, the exchange rate for Bitcoin determined on December 31st, 2017, by the Swiss Federal Tax Administration was CHF 13,784.38 (about $ 14,500). The Swiss Federal Tax Administration provides exchange rates for other cryptocurrencies in addition to Bitcoin. These rates are a recommendation to the cantonal tax authorities for wealth tax purposes. The rates are based on the average value of different trading platforms.
Income tax on cryptocurrencies in Switzerland
If an employee receives Bitcoins or other cryptocurrencies as a salary or benefit, it forms part of his or her taxable earned income. The Swiss Franc value of the cryptocurrency at the time it was received must be recorded on the salary statement. If a self-employed person receives Bitcoins or other cryptocurrencies for providing goods or services, it must be included as part of the principal or additional income from self-employment at the Swiss Franc value of the cryptocurrency at the time it was received.
Any income that a natural person derives from mining cryptocurrencies by making available computational power for consideration must be included as assessable income for tax purposes. Depending on the specific work arrangement (employee or independent contractor), the compensation received will count as income from salaried work or self-employment. If cryptocurrency trading is done on a professional basis, any profits are taxable and losses are tax deductible.
Capital gains from movable private assets, which include cryptocurrencies, are generally not subject to taxation and any capital losses are therefore not tax deductible.
Cryptocurrency regulations for businesses in Switzerland
Professional virtual currencies trading and the operation of trading platforms in Switzerland generally come under the scope of the Anti-Money Laundering Act and therefore give rise to a range of due diligence obligations. The anti-money laundering legislation applies to persons who exchange cryptocurrencies for fiat money and vice versa as well as for other cryptocurrencies and to custodian wallet providers. Switzerland imposes a registration process on cryptocurrency exchanges, which must obtain a license from the Swiss Financial Market Supervisory Authority (FINMA) in order to operate.
Operators of financial market infrastructures are subject to authorization by FINMA.
Government statements on cryptocurrencies in Switzerland
The Federal Council still cautions against risks in the areas of money laundering, terrorist financing, and investor protection, but emphasizes the advantages and potential that new technologies like blockchain technologies have to offer. Due to this, regulatory barriers for Fintech firms, mobile payment systems providers and online peer-to-peer lending were reduced by amending the Banking Regulations. Switzerland aims to create a means for companies to test innovative business ideas within a limited framework without having to comply with costly and time-consuming regulations. For example, Switzerland exempts providers that accept public funds of up to a total value of CHF 1 million (approximately $ 1.05 million) from the requirement to have a banking license.
However, firms that take advantage of this exemption must inform their customers in writing that the firm is not subject to supervision by the Swiss Financial Market Supervisory Authority (Eidgenössische Finanzmarktaufsicht, FINMA) and that the deposits are not protected by deposit insurance.
In January 2018 the Swiss State Secretariat for International Finance ( SIF) reported that it would set up a working group on blockchain and initial coin offerings (ICOs).
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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. For detailed information on crypto regulations we recommend contacting a certified legal advisor in the specific country.
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