Cryptocurrency Taxation in Switzerland

Part 3 of my “Crypto Taxes Around the World” series

How are BTC and cryptos taxed in Switzerland?

Switzerland is quickly gaining the reputation of being one of the friendliest cryptocurrency jurisdictions in the world. From the Ethereum Foundation and the Libra Association being headquartered there to the booming Crypto Valley in Zug, Switzerland is arguably one of the go-to spots in Europe for all things crypto. This is hardly surprising as the country has a long established history of sophisticated banking practices and financial innovation. The Swiss’ proactive attitude towards crypto is a logical step forward in their bid to remain one of the leading global financial marketplaces.

Interestingly, like Bitcoin itself, Switzerland is very decentralized: Direct democracy is the foundation of the Swiss Confederation and each canton has the power to establish its own tax rates.Thus, tax rates vary from canton to canton.

Decentralization and Direct Democracy are the cornerstones of the Swiss Confederation.

Although each canton boasts different tax rates, four policies are common to the entire Confederation:

1) Miners are considered self-employed and need to declare their income accordingly.

2) Individuals who are paid in crypto need to declare it as income tax.

3) Professional traders are subject to business tax regime: The criteria for qualifying as a professional trader depends on transaction volume, use of foreign currencies to finance trading activities and significant use of derivatives.

4) Occasional traders who trade from their personal accounts are exempt of capital gains taxes.

I can see your mouth watering at the prospect of being completely tax exempt from capital gains taxes. However, note that to qualify you must remain an occasional trader.

Also, cryptocurrencies are subject to a progressive wealth tax as they are considered an asset. All residents of Switzerland must declare their cryptocurrency holdings regardless of where they are stored. However, the wealth tax is quite modest as it varies from 0.13% to 0.97% depending on the total value of your assets. If you think this rate is too high just remember that any juicy capital gains you make in the future will be tax exempt.

The Swiss consider cryptocurrency a taxable asset

If you really want to avoid paying the tax man there is a “loophole” you can exploit: To avoid paying any wealth tax 1) your total assets must be inferior to 100K CHF (USD 102K) and/or 2) you must be a non-resident of Switzerland.

However, if you want to benefit from even friendlier tax laws, you should check out the Zug. Zug is so business friendly that some companies have struck special deals with the municipal government to lower their tax bill.

The municipality of Zug: The “Silicon Valley of Crypto”?

Further, the municipality of Zug is the first in the world to accept Bitcoin as a means of payment for government services and it also issues Ethereum blockchain-based eIDsas part of its “e-government” initiatives. Zug is the hotspot of all things crypto in Switzerland and also boasts a very advantageous geographical position in the heart of Europe.

As you can see, Swiss crypto tax laws are favorable and certainly more attractive than France where capital gains are subject to a 30% tax. Despite their apparent willingness to become a “Blockchain nation”, the French still have a lot of catching up to do if they want to compete with an avant-garde financial powerhouse like Switzerland.

France should look to the Alps for inspiration on how to become a Blockchain and cryptocurrency leader

Is Switzerland the friendliest crypto environment in the world? Read my next “Crypto Taxes Around the World” series to find out!

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