Switzerland has always been a global economic hub, and it makes no exception when it comes to crypto. The nation is a friendly host to over 900 blockchain and cryptocurrency companies, with a crypto adoption rate of 20% as of 2022 (sitting well above the global average of 14%). They’ve even got a small town called Zug (near Zurich) which has been dubbed the name ‘Crypto Valley’ due to its fertile ground for crypto ventures (including Ethereum and Tezos)!
Luckily for Swiss investors, their country has favourable legal frameworks for these digital assets and the Swiss Federal Tax Administration (FTA) has provided clear guidance on crypto taxation, outlining the important rules that taxpayers need to be aware of to file their tax returns correctly.
This comprehensive guide will explain everything about the FTA’s classification of cryptocurrency, the tax treatment of cryptocurrencies and related activities in Switzerland, and how Swiss cryptocurrency traders and investors can report their taxes with Crypto Tax Calculator.
Is crypto taxed in Switzerland?
Yes, in some circumstances. Switzerland has a unique taxation system in which if you classify as a private investor (and not a self-employed trader), you won’t be subject to paying capital gains tax. However, all Swiss tax-payers are still subject to paying income tax and also potentially wealth tax.
The FTA does not treat crypto as legal tender but instead considers it as a private asset - similar to bonds, stocks and property.
Are you a private investor or a self-employed trader?
Whether you are subject to capital gains tax will depend on whether you are considered a private investor or a self-employed trader. To qualify as a private investor, you must meet the following criteria:
- You need to hold your crypto for a period of 6 months or longer
- Trading volumes cannot exceed 5x the value of your portfolio at the start of the financial year
- Capital gains do not exceed 50% of your net income
- No third-party financing to purchase your crypto (i.e., you’ve bought your crypto with your own money)
- Futures and derivatives are only used for hedging and not speculation/trading
If you meet all of the above criteria, you will be considered a private investor; hence, your crypto profits will be completely exempt from CGT. Luckily, you aren't automatically considered a self-employed trader if you don’t meet all of these requirements. However, you should seek professional guidance from an accountant or the FTA to determine which group you fall into.
When is the deadline to report my crypto taxes in Switzerland?
The tax year in Switzerland runs from the 1st of January to the 31st of December. The filing deadline falls on the 31st of March, although a few cantons have different deadlines. You should report your crypto taxes alongside your income as part of your annual tax return.
If you fail to submit your taxes in time, you can apply for a free filing extension from the canton to which you report. Filing extensions generally grant you up until September/November, but it depends on how the FTA assesses your situation.
| Item | Date |
|---|---|
| Tax year period | 1st January - 31st December |
| Filing deadline | 2nd May |
| Extension deadline | 16th May OR 31st May (depending on your case) |
Does the FTA know about my crypto holdings?
Despite popular belief, cryptocurrency is extremely easy to track and is not as anonymous as many believe. Due to much stricter regulation around cryptocurrency exchanges and digital asset investment, almost all exchanges require users to complete a ‘Know-Your-Customer’ (KYC) identification application before the account can be used to purchase crypto. If you have signed up to any exchange which required this check, it is highly likely that the Swiss Federal Tax Administration (FTA) has your user record from that exchange. Withdrawals to external wallets are also tracked, and it is a simple process to follow the money trail from an exchange account to external wallets due to the availability of data on public blockchains.
The European Union’s sixth Anti-Money Laundering Directive means that any company that provides financial services to customers or other businesses must adhere to stricter regulations regarding customer identification. This directive also means that data is made available between EU member states, so signing up for an exchange in another EU country does not mean that the FTA will be unable to gain access to your data.
The European Commission’s proposed Directive on Administration cooperation (DAC8) is a step towards stricter regulation regarding cryptocurrency ownership and trading. The proposed update will likely take effect in the next 12 months, increasing data availability on cryptocurrency owners to financial authorities across EU member states to address tax evasion or fraud. Once this takes effect, DAC8 may allow the FTA to specifically search if a person owns cryptocurrency, as well as other information such as holdings, transaction history and withdrawal addresses.
What happens if I don’t report my crypto taxes?
This is considered tax evasion if you make an incorrect or incomplete tax return. According to lawyers, tax evasion in Switzerland is now considered tax fraud and criminal activity. This offence could lead to fines of up to 10,000 Swiss Francs (CHF) or, in some severe cases, lead to imprisonment of up to 3 years (depending on the severity of the tax evasion).
The FTA takes tax evasion very seriously, it is highly likely that they have access to data on individuals who have registered themselves on a centralised exchange. As such, we strongly recommend that investors ensure they have applied the correct tax treatment to their crypto transactions and file their taxes accurately.
How is crypto taxed in Switzerland?
Crypto users in Switzerland are subject to 3 main types of taxes: capital gains, income, and wealth tax. Below, we’ll cover the different scenarios and tax rates.
Capital Gains Tax
Previously, we determined that private investors are exempt from paying capital gains tax. However, self-employed traders or business owners are subject to capital gains tax.
NOTE: There is no separate calculation for capital gains tax; instead - your capital gains will be added to your taxable income and taxed.
Private investors will be allowed to choose from the following inventory methods (which are approved by the FTA):
- First In First Out
- Last In First Out
- Highest In First Out
- Average Cost Basis
To see examples of the application of these different accounting methods - please visit here.
Income Tax
In Switzerland, there are 3 different types of income tax:
- Federal income tax
- Cantonal income tax
- Municipal income tax
The federal tax rates are consistent all over the country. However, each canton has its own specific tax laws and rates. Municipalities generally follow the tax rules of the canton it is governed under, although they have permission to set their own communal tax rates. In total, you have 26 cantons and 2,929 municipalities in Switzerland, so there are quite some variations in the cantonal and municipal tax rules & rates.
Federal Income Tax Rate
The federal tax rate follows a progressive system, so the more you earn, the higher your tax rate will be. The personal income tax rates (for single taxpayers) can be seen below:
| Taxable Income (CHF) | Tax on Column 1 | % on excess |
|---|---|---|
| 0 - 17,800 | 0 | 0 |
| 17,801 - 31,600 | 0 | 0.77 |
| 31,601 - 41,400 | 131.65 | 0.88 |
| 41,401 - 55,200 | 217.90 | 2.64 |
| 55,201 - 72,500 | 582.20 | 2.97 |
| 72,501 - 78,100 | 1,096.00 | 5.94 |
| 78,101 - 103,600 | 1,428.60 | 6.60 |
| 103,601 - 134,600 | 3,111.60 | 8.80 |
| 134,601 - 176,000 | 5,839.60 | 11.00 |
| 176,001 - 755,200 | 10,393.60 | 13.20 |
| 755,201 and above | 86,848.00 | 11.50 |
Source: PricewaterhouseCoopers
NOTE: to see the tax rates for married taxpayers or single tax payers with minor children, please visit here.
Wealth Tax
In Switzerland, the wealth tax applies to your total wealth assets less debt at the end of the financial year period. All private wealth assets need to be factored into this calculation. These assets include:
- Cash, stocks, equities, bonds
- Physical assets which possess value - such as property, vehicles, gold
- Cryptocurrencies
The value of each cryptocurrency should be calculated on the 31st of December of the financial year using the market rates published by the FTA. If the FTA does not have market rates for a certain cryptocurrency you hold, then the market value from a reputable source should be used instead (Crypto Tax Calculator will compute this for you).
Once you have calculated the total value of your wealth assets, you can find out how much wealth tax you need to pay by searching up the tax rates in the canton you belong to here. Generally speaking, most cantons have a wealth tax that ranges between 0.3% - 1%.
Taxable scenarios
Capitals Gains examples
The following events are taxable only if you are a self-employed trader and NOT a private investor:
- Selling crypto for Swiss Francs or another fiat currency (USD, EUR, etc.)
- Trading crypto for crypto (e.g.: BTC → ETH)
- Paying for goods or services with crypto
- Trading/Transfer fees
- Lending crypto
- Margin trading
- Futures / Derivatives trading
- Trading NFTs
- Liquidity Pools
If you are a private investor, the above are considered non-taxable.
Income examples
The crypto activities listed below will be taxed as income at the market value of your received coins at the time of the transaction. However, you won’t be subject to capital gains tax if you decide to sell these coins at a later date (assuming you are a private investor).
- Airdrops
- Forks
- Mining
- Staking rewards
- Salary / Freelancing
- i.e., receiving crypto as a form of payment
- Creating and selling NFTs
Gifting crypto
In Switzerland, they have a separate tax for gifting assets, including gifting crypto. These rules are set by each canton with rates up to 36%.
The Gift Tax rate will depend on several factors:
- The value of the gifted asset
- The type of asset being gifted
- Which canton are you governed under
- Your relationship to the receiver of the gift (e.g., parent, friend, etc.)
To see the Gift Tax rate which would apply to you, please visit here.
Miscellaneous Scenarios
Donating Crypto:
There’s no specific guidance on whether crypto donations are tax-deductible; however, donating over 100 CHF to a qualified Swiss charity can be deducted from your taxable income.
Initial Coin Offerings (ICOs):
Similar to airdrops, the FTA hasn’t provided guidance on how ICOs should be treated from a tax perspective, so it’d be best to speak to a tax professional on this if you have participated in any ICOs.
Record Keeping
It’s important to keep a record of your complete transaction history to ensure you have correctly calculated your tax return and, in case you get audited by the FTA after filing your taxes.
The FTA may ask for the following records:
- Transaction history dates and timestamps
- List of cryptocurrencies traded
- Quantities of traded cryptocurrencies and value in CHF at the time of transaction
- Types of transactions
- Records from exchanges and wallet addresses
If you don’t keep records of your data and lose access to an exchange/wallet you were trading on (whether due to the exchange shutting down or you’ve lost your crypto keys), you will have trouble filing an accurate tax return with missing data.
To avoid situations like this, it’s best to keep regular backups of your transaction history or use cryptocurrency tax software like Crypto Tax Calculator to aggregate all your data and tax reports in one place.
How to file taxes in Switzerland?
Submitting your tax returns in Switzerland is fairly straightforward. You’ll need to head to the Swiss government’s website and then simply enter the canton you live in. This will then take you to a website (specific to the canton you typed in) where you can complete your tax return. Each canton will have slightly different instructions and filing processes; for example - in the Canton of Zurich, crypto is declared under ‘other assets’, and you must have proof of the digital wallet in which your assets are stored. Whereas, say in the Canton of Basel-Stadt, your crypto assets should be declared in your tax return using the code 835.
Before you file your taxes, you need to have the following documents prepared:
- Salary statements
- Bank account statements
- Private Swiss pension statements (if you’re retired)
- Medical expenses
- Work-related expenses
- Donation receipts
- Other statements relating to investments
To calculate your wealth tax, you will also need to provide the market value of the following assets:
- Cash & bank account balances
- Property & real-estate
- Shares, equities, bonds and other securities
- Cryptocurrency assets
- Insurance policies
- Other valuable assets such as precious metals, collectibles, etc.
How Crypto Tax Calculator can help?
Manually maintaining records of all of the above doesn’t sound like much fun, does it? Spoiler: it’s not. That’s where we come in! Our crypto tax calculator software can help you aggregate your crypto transaction data to help calculate any gains, losses, income and/or expenses. As an added bonus, we’ve worked with tax professionals from Switzerland to ensure our platform follows your region’s guidelines.
Once you’ve imported all your data to form a complete overview of your trading history, you’ll be prompted to reconcile any outstanding lines. After those are reconciled, you’ll have the option to download reports showing these values clearly. These reports and the information included will give you the amounts needed to complete your yearly tax return for the FTA.
Patrick has been in the crypto industry for the last 7 years and is passionate about sharing his knowledge and experience in web3. Patrick has also covered the crypto space for Forbes Advisor, Canstar and The Chainsaw.
