Switzerland, cryptocurrencies tax treatment as payment instruments

The increasing use of cryptocurrencies both as digital payment instruments and as investments makes it necessary to schematize their tax treatment. In our analysis, we rely on the working paper prepared by the Federal Tax Administration in December 2021.

We first examine cryptocurrencies in their function as digital instruments used as means of payment (payment tokens).

With regard to wealth tax, payment tokens are assets, tradable and intangible values to be considered as movable assets and therefore subject to wealth tax on the basis of the market value at the end of the tax period. In the absence of such value, the reference is to the initial purchase price.

For income tax purposes, if an employee receives part of his or her salary in the form of payment tokens what is received forms part of taxable income and must be included in the salary certificate.

In the event that for mining of payment tokens compensation is received with cryptocurrency, what is received represents remuneration for the activity and is therefore to be considered taxable income. If the characteristics of this are met, it could fall under the hypothesis of an independent gainful activity.

In addition to mining, tokens can also be generated by staking (tokens are locked in a blockchain for a certain period to validate transactions). Validators, who receive compensation for staking, can act by joining their resources in staking pools or as individuals. In the case where compensation is received from the staking pool this is to be considered as income from movable substance. If, on the other hand, individuals act as individual validators, and provided the characters are met, the income will be taxable as income from independent gainful activity.

Payment tokens, as reiterated in the introduction, are digital payment instruments and are therefore not subject to withholding tax and stamp duty.

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