Swiss tax authorities confirm tax treatment of cryptocurrencies

The Swiss Federal Tax Authorities had been tasked by the Federal Government in December 2018 to analyse whether they see any need to adjust the Swiss tax system to with respect to Distributed Ledger Technology (DLT) and Cryptocurrencies. In a report published on 19 June 2020 they conclude that they do not see need to adjust the current tax law and practice.

The report provides a good summary of the existing corporate tax and VAT framework to specific DTL-business models and fundraising (ICOs/STOs), but it does not contain much new information. In addition to the working paper dated 27 August 2019, the tax authorities have explicitly mentioned the tax treatment of asset tokens that confer membership rights (i.e. tokenised shares and tokenised participation rights). Those had been missing in the working paper but it was always communicated clearly that the tax authorities would treat such rights equally to shares and participation rights. Hence, such tokens are subject to Swiss withholding tax and stamp duties.

Even though there is not much new information in the report, its publication is a strong sign that the Swiss tax framework for DLT and cryptocurrencies will remain unchanged in the coming years. The report was prepared taking into account the opinions of tax experts, industry participants and cantonal tax authorities and demonstrates that there is broad alignment.

Do you have any questions regarding the taxation of DLT or cryptocurrencies? Please do not hesitate to contact me.