Many people consider Switzerland to be an ideal location for startups and cryptocurrency investors. It is home to over 900 cryptocurrency businesses, and its acceptance rate of cryptocurrencies is 20%, a little higher than the average worldwide rate of 16%. The fact that most private investors are free from crypto taxation in Switzerland contributes to the widespread acceptance of cryptocurrencies. You are exempt from paying capital gains tax (CGT) if you are an individual investor in Bitcoin, Ethereum, or any other cryptocurrency; nevertheless, you can still be subject to other taxes. There are precise regulations on how various cryptocurrency transactions are taxed by the Federal Tax Administration (FTA) in Switzerland. Understanding the crypto tax in Switzerland is crucial for all investors.
Whether you’re new to the world of cryptocurrency or simply want to understand how taxes work, we’ll break it down for you in easy-to-understand language. By the end of this guide, you’ll have a clearer understanding of what you need to know when it comes to crypto taxation in Switzerland.
Is Crypto Legal in Switzerland?
Yes, cryptocurrencies are legal in Switzerland. In Switzerland, it’s totally okay to use and trade cryptocurrencies like Bitcoin. The country actually encourages new technology like this. The Swiss Financial Market Supervisory Authority (FINMA) oversees the regulation of cryptocurrencies and blockchain projects, focusing on investor protection and combating financial crime.
They have rules to make sure it’s used safely and doesn’t cause problems like cheating or illegal activities. The government watches over it all to keep things fair and secure. Because of this, Switzerland has become a popular place for businesses and people who want to use cryptocurrencies.
What is the Swiss Federal Tax Administration?
In Switzerland, cryptocurrency taxes are regulated primarily by the Swiss Federal Tax Administration (FTA). The FTA oversees tax matters at the federal level and provides guidelines and regulations regarding the taxation of cryptocurrencies. However, crypto taxation can also be influenced in Switzerland by cantonal (regional) tax authorities, as tax laws and rates can vary between different cantons.
Additionally, the Swiss Financial Market Supervisory Authority (FINMA) plays a role in regulating certain aspects of cryptocurrencies, particularly concerning anti-money laundering (AML) and know-your-customer (KYC) regulations for businesses operating in the cryptocurrency sector. Overall, while the FTA is the main authority responsible for cryptocurrency taxation, coordination and collaboration between federal and cantonal authorities are important to ensure consistent and comprehensive regulation across Switzerland.
Can FTA Track Crypto Transactions?
Data security and anonymity in the cryptocurrency space often get confused. But the reality is that blockchains maintain public ledgers, making it relatively straightforward to trace crypto transactions. With the implementation of stricter Know Your Customer (KYC) regulations on exchanges, it’s increasingly challenging to maintain anonymity. Proposed regulations such as the AMLD-6 and forthcoming directives like DAC-8 in Europe aim to enhance data visibility and ensure compliance with anti-money laundering and tax laws within the crypto sphere. Considering these developments, any notions of evading reporting obligations to tax authorities, such as the Swiss Federal Tax Administration (FTA), should be dismissed.
How Crypto is Taxes in Switzerland?
Crypto does not qualify as currency because the FTA doesn’t recognize it as real money. Rather, they are classified as crypto-based assets, or more precisely, as kryptobasierte vermögenswerte.
Because of this classification, they are similar to stocks and bonds, which are considered private wealth assets. Investors who invest in Switzerland are exempt from paying CGT on private wealth assets, thus they are not subject to it.
However, if you trade or run a business, you must pay CGT on your gains. On the other hand, ordinary income tax rates apply to your capital gains, which are immediately added to your income.
There are two more kinds of crypto taxations in Switzerland that apply to cryptocurrency transactions: wealth tax and income tax.
1. Income Tax
In Switzerland, income tax is applied at both the federal and cantonal levels. Here’s a brief overview of income tax and its types in Switzerland:
- Federal Income Tax: The Swiss federal government imposes income tax on the income earned by individuals and businesses. Federal income tax rates are progressive, meaning they increase as income levels rise. The tax rates and brackets are set by the federal government and apply uniformly across all cantons.
- Cantonal Income Tax: Each canton in Switzerland has its own income tax laws and rates. Cantonal income tax rates can vary significantly from one canton to another. Some cantons have a flat tax rate, while others have progressive tax rates with multiple brackets. The cantonal income tax is calculated based on the income earned within the respective canton’s jurisdiction.
- Municipal Income Tax: In addition to federal and cantonal income taxes, individuals and businesses may also be subject to municipal income tax, which is levied by the local municipalities. Municipal income tax rates can vary widely depending on the municipality and are typically calculated as a percentage of the individual’s or business’s taxable income.
| Taxable income (Swiss Francs) | Percentage on excess (%) |
| 0 to 18,300 | – |
| 18,300 to 32,800 | 0.77 |
| 32,800 to 42,900 | 0.88 |
| 42,900 to 57,200 | 2.64 |
| 57,200 to 75,200 | 2.97 |
| 75,200 to 81,000 | 5.94 |
| 81,000 to 107,400 | 6.60 |
| 107,400 to 139,600 | 8.80 |
| 139,600 to 182,600 | 11.00 |
| 182,600 to 783,200 | 13.20 |
| 783,200 | 11.50 |
The income taxes applied by the cantons are not flexible. Each canton has its crypto taxation rate in Switzerland, and the cantons into which municipalities are placed control their income taxes. Switzerland has 2,136 municipalities and 26 cantons in total. The rates of federal income tax range from 0% to 11.5%, based on an individual’s income.
2. Wealth Tax
Wealth tax applies to all personal wealth assets in Switzerland including:
- Stocks and Bonds
- Physical assets like precious metals, property, and automobiles
- Crypto Assets
It applies to the value of the assets reported at the end of the financial year. The total value of crypto assets is to be calculated at the end of the tax year based on the price list published by the FTA. If the price of a particular asset is not specified by the FTA, you can use the fair market value of the asset from a reputable source and pay taxes on the value.
Wealth tax varies based on the canton you live in, although most cantons have a tax rate of 0.3 to 1%.
Capital Gains Tax
Capital gains tax is a tax you pay when you make money from selling things like stocks, real estate, or cryptocurrencies for more than you paid for them. In Switzerland, if you sell your Bitcoin or other assets for a profit, you might owe tax. The amount you owe can depend on how long you hold onto the asset and other factors.
Individual investors are generally exempt from capital gains tax, but there are conditions. To qualify as an individual investor, you must meet certain criteria:
- You’ve held your cryptocurrency for over 6 months.
- Your trading turnover is less than 5 times your holdings at the start of the tax year.
- Your capital gains from crypto are less than 50% of your total income in a tax year.
- You haven’t used debt financing for your investments.
- You only use derivatives as a hedge to protect your investments.
However, whether you’re classified as an individual investor or a professional trader depends on each canton’s regulations.
How to Calculate Crypto Capital Gains?
Calculating crypto capital gains involves determining the difference between the selling price of your cryptocurrency and its original purchase price. This is a very important step to understand crypto taxation in Switzerland. Here’s a step-by-step explanation with an example:
- Determine the Purchase Price: Start by identifying how much you paid to acquire the cryptocurrency. This includes the purchase price of the crypto itself and any associated fees or expenses, such as transaction fees or exchange fees. For example, let’s say you bought 1 Bitcoin for $10,000, and you paid a $100 fee for the transaction. So, your total purchase cost is $10,100.
- Calculate the Selling Price: Next, determine the amount you received when you sold the cryptocurrency. This includes the selling price of the crypto minus any fees or expenses related to the sale. For instance, if you sold 1 Bitcoin for $15,000 and incurred a $150 transaction fee, your total selling price is $14,850.
- Compute the Capital Gain: Subtract the purchase price from the selling price to find the capital gain. In our example, the capital gain would be $14,850 (selling price) – $10,100 (purchase price) = $4,750.
- Consider Additional Costs: If you incurred any additional costs related to the sale, such as transfer fees or exchange fees, subtract those from the capital gain. For simplicity, we’ll assume there are no additional costs in this example.
- Apply Tax Rate: Once you have calculated the capital gain, determine the applicable tax rate based on your tax jurisdiction and classification (individual investor or professional trader). In Switzerland, individual investors may be exempt from capital gains tax under certain conditions, while professional traders are typically subject to income tax on their gains.
By following these steps, you can calculate your crypto capital gains and complete your crypto taxation obligations accordingly in Switzerland.
Crypto Losses
In Switzerland, as an individual investor, you won’t be taxed on capital gains from crypto, so you can’t offset your losses against your gains for crypto tax purposes. However, if you’re a professional trader or operate a business, you may be able to claim a deduction for your capital losses. The Swiss Federal Tax Administration (FTA) evaluates such cases individually, so it’s advisable to reach out to them for guidance.
Stolen or Lost Crypto:
Regarding lost or stolen crypto, there’s no specific guidance on how it’s treated for crypto taxation purposes in Switzerland. Since capital gains from crypto aren’t taxable for individual investors, it’s unlikely that you can deduct lost or stolen crypto from your crypto income. However, for precise advice on this matter, consulting the FTA would be recommended.
Tax Breaks on Crypto in Switzerland
There are certain crypto tax breaks available in Switzerland for cryptocurrency investors, particularly for individual investors. Here are some key points to consider:
- Capital Gains Exemption: Individual investors in Switzerland are generally not taxed on capital gains from cryptocurrencies. This means that if you buy and sell crypto for a profit, you will not be subject to crypto taxation in Switzerland.
- No Deductions for Losses: While capital gains are exempt from taxation, this also means that you can’t deduct any losses you incur from your cryptocurrency investments against other income for tax purposes.
- Professional Traders and Businesses: If you are classified as a professional trader or operate as a business, different tax rules may apply. In these cases, you may be able to claim deductions for capital losses and potentially be subject to income tax on your crypto profits.
- Individual Investor Criteria: To qualify as an individual investor, certain criteria must be met. Like holding cryptocurrencies for over 6 months, limited trading turnover relative to holdings, and crypto gains making up less than 50% of total income.
How to File Crypto Tax in Switzerland?
Filing crypto taxes with the Swiss Federal Tax Administration (FTA) involves accurately reporting your cryptocurrency transactions and any applicable gains or losses on your tax return. Here’s a general guide on how to do it:
- Maintain thorough records of all your cryptocurrency transactions, including purchases, sales, exchanges, and any other activity. Record the dates, amounts, prices, and any fees associated with each transaction.
- Understand your tax obligations based on your classification as an individual investor or a professional trader/business. Individual investors typically don’t pay taxes on capital gains from cryptocurrencies, while professional traders may be subject to income tax.
- Use the appropriate tax forms provided by the FTA to report your cryptocurrency transactions. This may include forms for declaring capital gains, income from trading activities, or other relevant information.
- Calculate your capital gains or losses by subtracting the cost basis (purchase price plus any associated fees) from the selling price (minus any selling fees). Report these figures accurately on your tax return.
- Attach any supporting documentation, such as transaction records, to your tax return to substantiate the information you’ve provided.
- Submit your tax return electronically through the FTA’s online portal or by mail, following the instructions provided by the FTA.
- If you’re unsure about how to report your cryptocurrency transactions or if you have complex tax situations, consider seeking help from a professional in crypto taxation in Switzerland.
- Keep copies of your tax return and all supporting documentation for your records. This will be important for future reference and in case of any inquiries from tax authorities.
By following these steps and ensuring accurate reporting of your cryptocurrency transactions, you can fulfill your tax obligations to the FTA in Switzerland.
What data will FTA Require?
The Swiss Federal Tax Administration (FTA) requires specific records to ensure proper reporting of cryptocurrency transactions for tax purposes. To streamline your tax filing process and remain compliant with tax laws, it’s essential to maintain the following records:
- Dates and times of all cryptocurrency transactions.
- Details of the types of cryptocurrencies involved in each transaction.
- Categories of transactions, such as disposals, acquisitions, or trades.
- Quantities of assets bought, sold, or exchanged in each transaction.
- Market values of the assets at the time of each transaction.
- Records from cryptocurrency exchanges used for trading.
- Personal wallet addresses, especially for custodial wallets, where applicable.
By keeping accurate records of these details, you can ensure a smooth tax filing experience and demonstrate transparency in your cryptocurrency activities to the FTA.
What is the Deadline for Crypto Tax in Switzerland?
In Switzerland, the deadline for filing taxes depends on various factors, including your canton of residence and whether you’re filing as an individual or a business. Generally, tax returns are due sometime between March and June of the year following the tax year.
For example, if you’re filing taxes for the calendar year 2023, the deadline could be in March, April, May, or June of 2024, depending on your canton and any extensions granted by local tax authorities.
Final Words
As you deal with cryptocurrency and taxes in Switzerland, make sure to keep things simple. Keep good records of your crypto transactions, know what you owe in taxes, and ask for help if you’re unsure. By staying on top of things and asking questions when needed, you can handle your taxes smoothly and feel confident about managing your money.
