The crypto world is moving in the digital domains. But in almost all transactions, local officials find a real-world connection, such that tax payments are unequivocally due.
It’s a non-obvious working paper that the Federal Tax Administration (ESTV) has posted on its website. But the Contents He has it all. “Cryptocurrencies are subject to federal direct taxes, withholding taxes and stamp duty at the federal level,” the officials explain succinctly.
What that means has been spelled out in detail by tax authorities with several cases, each leading to tax liability for cryptocurrency citizens.
The purchase price is in Swiss francs
For example, the federal government has so expertly regulated that payment tokens in the form of pure digital means of payment are a valueable, tradable, and intangible asset that is included under movable capital for tax purposes. Payment tokens are therefore subject to cantonal wealth tax and must be declared at the end of the tax period at market value.
If a current valuation rate cannot be determined, the administrators decree that the payment token must be declared at the original purchase price – converted into Swiss Francs.
The devil is in the details
Simply holding payment tokens obtained via crypto exchanges in the form of purely digital means of payment generally does not generate any income or profits subject to income tax and withholding tax. However, if employees are paid wages or fringe benefits in the form of pay codes, according to the worksheet, this is taxable earned income that must be shown on the wage statement. Amount is the value at the time of flow, also converted to CHF.
Simple trading in payment tokens is actually tax-free for individuals, similar to currencies. Depending on the type, scope and financing of transactions, there may not be management of own assets, but self-employment. After that, however, capital gains from the sale of payment tokens are considered commercial and subject to income tax. Losses are tax deductible once booked.
income from assets
Tax officials don’t stop at the so-called mortgage either. Just like when mining digital currencies, new tokens can also be generated when stored. Beneficiaries who provide their tokens are compensated for this process. The FTA concluded that this is mainly income from movable property.
Tax collectors warn that so-called airdrops, that is, receiving free tokens without any action on your part, are also subject to income tax as income from transferred assets at the time they are allocated to the extent of their market value.
“Tax year joke”
However, not everything seems clear and coherent. The distinction becomes difficult if customers are rewarded with self-generated coins – comparable to retailer Coop’s super points. “In principle, the accumulated Coop Supercard points are taxed as assets,” the cantonal tax office in Zurich once told the daily newspaper. “Opinion” explained. But Coop itself assumes this is tax deductible. Then Blake wrote about his tax year joke. The classification of reward programs and their tax consequences are by no means unequivocal.
In practice, utility tokens, for example, are usually issued by institutions. Since in such towers the majority of the tax consequences are eliminated at the investor level anyway, the tax authorities in this case focus on the problem by a joint-stock company.
No end in sight
And so, for almost all cases involving cryptocurrencies, there are new interpretations of old rules that also involve digital assets. As a precaution, the officials wrote that the operational specifications of the FTA and cantonal tax authorities should continue to develop and take into account new pools in the digital asset space. “If necessary, the FTA will send a corresponding notification,” says Switzerland, warning of the future of taxation.