Crypto Tax Legislation & Law in Switzerland

Currently, there is no specific legislation for the taxation of crypto-assets. Therefore, the general national tax law principles apply. However, the Swiss Federal Tax Administration issued a working paper dated 14 December 2021 (“Paper”) which sets out certain guidelines regarding the taxation of crypto-assets. There also exist cantonal guidelines for cantonal/municipal wealth and income taxes, which largely correspond to the Paper.

For income tax purposes, the buying and selling of crypto-assets is to be treated the same as transactions with conventional FIAT currencies. In the case where the individual holds the crypto-assets as part of their private wealth, the gains and losses resulting from such transactions generally constitute tax-exempt capital gains or non-tax-deductible capital losses.

Generally yes.

With regard to securities trading, the Swiss Federal Tax Administration published in circular no. 36 of 27 July 2012 criteria for the distinction between professional activity (self-employment) and private wealth management. According to this circular, criteria that speak in favour of a professional activity are, in particular, short holding periods, high transaction volumes, leveraged transactions and the use of derivatives for purposes other than hedging. The assessment is made based on all the circumstances of the specific case. While the circular provides for certain safe harbour rules, these will rarely be met in practice. According to the Paper, the circular and its criteria are to be applied by analogy in case of trading in crypto-assets. If the crypto-asset transactions performed by an individual qualify as professional activity, any income deriving therefrom (including capital gains) constitutes taxable income from self-employed activity, which is also subject to social security contributions.

Only in case of a professional activity, losses made on crypto-assets can be offset against any other type of taxable income. Private losses are not deductible.

The general period for offsetting tax loss carry-forwards is 7 years. A carry-back is not possible.

The Paper does not address the taxation principles applicable to NFTs. In general, the same principles of taxation apply to NFTs, but a case-by-case analysis is required, in particular with respect to VAT.

As a rule, crypto-assets generated through mining qualify as taxable miscellaneous income. There is no possibility to deduct expenses or losses unless the mining qualifies as professional activity.

According to the Paper, it has to be distinguished between staking which is operated through a staking pool and such that is not. In the case of a staking pool, the remuneration which the delegators receive from the staking pool for the staked crypto-assets generally qualifies as taxable capital income. In the case that staking is not operated through a staking pool, the remuneration which an individual receives for its validator activities may qualify as income from self-employment, depending on the specific circumstances.

According to the Paper, airdrops qualify as taxable income from capital investments; this tax treatment is generally considered too simplistic among Swiss tax experts and a different treatment may apply depending on the specific circumstances of the airdrop. Where an employee is rewarded with crypto-assets, this presents an income in kind from employed activity and the general rules governing taxation of employee participation schemes can be applied by analogy to a certain extent. In the absence of any explicit guidelines for a specific event, the general taxation principles as provided in local tax law will be applicable.

Individuals subject to unlimited taxation in Switzerland are obliged to file an annual tax return and to declare the value of their crypto-assets and taxable income deriving therefrom. In case of employee rewards, documentation requirements apply with respect to the salary certificate. Where a holder of crypto-assets deceases, these assets form part of the estate and may trigger inheritance taxes in Switzerland, depending on the canton and heir; as such, the assets are to be declared in the inheritance tax return. The same applies for gifts made in the form of crypto-assets, to the extent that they might trigger donation tax, depending on the canton and recipient. 

In Switzerland, the cantons and municipalities levy wealth taxes. The Paper provides guidance with regard to the wealth taxation of crypto-assets. Crypto-assets qualify as taxable movable intangible assets which have to be declared in the annual tax return at market value. The Swiss Federal Tax Administration publishes the tax-relevant market values annually for approximately 50 common crypto-currencies such as BTC, ETH and XRP. Where the crypto-assets are not publicly listed, ultimately the purchase price is considered as the relevant wealth tax value. Depending on the nature of the crypto-assets, transactions may trigger securities transfer stamp duty (if a Swiss securities dealer is involved) and returns may incur Swiss federal withholding tax (in case of a Swiss issuer). Details regarding the classification of crypto-assets are described in the Paper.