Tax Treatment of Cryptocurrencies - Part 1: Individuals

Cryptocurrencies are completely detached from governmental ties and are only under the control of the users. However, since they possess value, the state demands taxes on them. Here you will learn what specifically needs to be considered for natural persons.

The covered cryptocurrencies

‍The legal claims that a token represents depend on its respective function. The different legal claims can have a direct influence on the tax treatment of the token. Therefore, it is important that each token is always considered and evaluated individually. For example, if a token leads to a periodic payment to the holder, it is conceivable that withholding tax becomes due. On the other hand, if the token provides a right to a future service or delivery, it must be examined whether VAT is owed. The statements made here only concern pure cryptocurrencies, the most famous example of which are Bitcoins.

‍Natural persons

‍Many cantons have so far commented on the taxation of cryptocurrencies. The cantons Lucerne, Zurich and Zug have expressed similar stances. In all these cantons, wealth tax is levied on a stock of cryptocurrencies. The cryptocurrencies themselves should be listed under the item "other accounts" in the securities and accounts directory. As an annex, a copy of the wallet statement at the end of the tax period should be sent. The Federal Tax Administration (which treats cryptocurrencies like foreign currencies) publishes an end-of-year tax rate for certain cryptocurrencies – including Bitcoins. The cantons have different views on how to assess cryptocurrencies for which the FTA does not publish a year-end tax rate. In Canton Zurich, the year-end rate used is that which was common on the platform most popular for that currency. Lucerne, on the other hand, insists on an assessment at the purchase price. In Swiss tax law, capital gains from movable private assets are generally tax-free, or losses are not tax-deductible. This also applies to cryptocurrencies. However, one must be careful; salary payments or remuneration paid in cryptocurrencies are subject to regular income tax. The same applies to mining or commercial trading, which is considered self-employment. If this is the case, then the profits are taxable and the losses deductible.

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