DeutschAttention: This article refers to taxation in Switzerland. Depending on your place of residence, the tax treatments differ: Germany or Austria. Almost every country now has its own regulations for the taxation of cryptocurrencies when it comes to how profits from digital currencies are taxed. It is therefore important to familiarize yourself with the individual tax requirements of the countries, especially in Switzerland, of course. It is clear that, based on the so-called civil law qualification, Bitcoin and the other cryptocurrencies are to be regarded as monetary rights to an item. This in turn means that cryptocurrencies belong to the net assets according to Art. 13 Para. 1 StHG. Only smaller amounts that are used in the area of payment transactions do not have to be declared as cash, analogous to the Swiss franc. For this, however, the bitcoins or the other digital currencies must actually be used for payment.
Problem of Valuation
A controversial point under Swiss tax law is the valuation of assets that may result from trading in cryptocurrencies. Specifically, it concerns the valuation of the individual prices of the cryptocoins, namely at what point in time this should take place in detail. For example, the Swiss Tax Conference recommended in 2016 that Bitcoin should be treated like a foreign currency. Accordingly, the value relevant for wealth tax would generally be the price of the cryptocurrency on December 31 of the year. With regard to the taxation of cryptocurrencies and the resulting profits in Switzerland, it should therefore be noted that holdings of cryptocurrencies belong to net assets and are therefore subject to wealth tax.
Are Capital Gains also Taxable?
Another question is whether not only holdings of cryptocurrencies are classified as assets and are therefore subject to wealth tax, but whether capital gains are also taxable. In Switzerland, such capital gains that result from a coin balance held as part of private assets are considered capital gains and are therefore tax-free in Switzerland.
However, the situation is different with mining, because this is a commercial activity or an employment. This falls within the scope of income tax, so that the income generated from mining is actually taxable. If this income is not declared, this would constitute tax evasion.
Conclusion on Taxation of Cryptocurrencies in Switzerland
In conclusion, there are five relevant facts regarding the taxation of cryptocurrencies in Switzerland, namely:
- Cryptocurrency holdings fall within the scope of taxable assets
- The value of the cryptocurrencies is then added to the other asset elements (e.g. bank balances, shares, cash, real estate) and taxed. Here, the tax rate is normally between 0.2 and 3% of the assets, with an allowance of up to approximately 100,000 francs (amount depending on the canton).
- All cryptocurrencies must be recorded – not just Bitcoins
- Capital gains from trading cryptocurrencies are tax-free – On the other hand, capital losses are also not tax deductible.
- Mining falls within the scope of income tax and is therefore taxable
How do you declare Bitcoin and Co. in the tax return?
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- The cryptocurrency balance can be declared in the tax form in the securities and credit balance register as “other credit balances”, stating the respective cryptocurrency.
- An excerpt from the wallet (digital wallet) with all existing balances of Bitcoin, Ethereum and Co. on the balance sheet date serves as proof in the tax return
- As is well known, there are no uniform rates for cryptocurrencies. Therefore, the Federal Tax Administration uses an average value from various stock exchanges. This is published here: Price lists direct federal tax of the respective year
- If the tax administration does not maintain an official exchange rate for the cryptocurrency held, the purchase price or the year-end closing price on a common exchange can be stated (the handling here is again different from canton to canton).
Other countries, other taxation:
Taxation of cryptocurrencies and profits in Germany
Taxation of cryptocurrencies and profits in Austria
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Finally, the explicit note again: The preceding explanations do not constitute binding legal advice. Anyone who already trades in digital currencies and generates income from sales transactions or is planning to get started should definitely rely on the assistance of a tax expert. Ideally, these already have extensive experience in connection with cryptocurrencies. It is by no means the case that every tax advisor is now familiar with the topic of taxes on cryptocurrencies in Switzerland. The specialists also provide detailed information about special features and deadlines for the sale as well as special conditions with regard to the individual taxation of profits and losses.
