Cryptocurrencies & Taxes - Part 1: Wealth Tax

Bitcoin, Ethereum, Ripple or EOS: Cryptocurrencies are becoming increasingly well-known and the selection of traded cryptocurrencies is huge. But how do they affect your tax return? In our series of articles, we explain the tax aspects of cryptocurrencies. Today we show you how they have to be declared in the assets.

What are cryptocurrencies?

Cryptocurrencies like Bitcoin are digital means of payment based on cryptographic tools such as the blockchain or digital signatures. Unlike national currencies, cryptocurrencies are not issued by a national bank, but are created and stored decentrally. Units in cryptocurrencies (coins) are not securities, but digital means of payment dependent on a protocol and the technology behind it. However, since they can serve as a means of payment and an investment, they can be compared to cash or a bank balance, which is why they are also tax-relevant.

Do I pay wealth tax on my cryptocurrencies?

Cryptocurrencies are subject to wealth tax, which is why they must also be declared in your tax return. Where these should be indicated can differ depending on the canton. In the canton of Zurich, cryptocurrencies must be declared in the securities and credit balances directory as "other credit balances," with the designation stated, while in Basel-Stadt they must be listed under "cash, precious metals, and other assets." Here the respective cantonal tax administration can provide information. Proof must be provided using a printout of the digital wallet (wallet) as of the end of the tax period. To determine the official exchange rate of a currency, you can refer to the rate lists of the Federal Tax Administration, which calculates an exchange rate based on an average of up to 12 different exchanges for the most commonly used cryptocurrencies. If your cryptocurrency is less known and therefore not in the rate lists of the FTA, the exchange rate is based on the value at the most common exchange platform for that currency. If no exchange rate can be determined in this way, the original purchase price in Swiss francs must be used.

In the next article of our series "Cryptocurrencies & Taxes" we will show you whether and how cryptocurrencies can influence income tax.

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