Do Bitcoin & Co. belong in your tax declaration?
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The value of crypto currencies virtually exploded in the last few months. This has created a lot of interest from professional investors as well as retail clients. But how do these new means of payment and financial assets to be judged taxwise? A just published leaflet of the Zug tax authority creats transparency.
Crypto Valley is an ecosystem centered in and around the Swiss canton of Zug with active connections to international centers of blockchain innovation in London, Singapore, Silicon Valley and New York.
Thanks to its business-friendly regulatory framework, deep talent pool and sophisticated infrastructure, Crypto Valley is quickly becoming a global center where emerging cryptographic, blockchain and other distributed ledger technologies and businesses can thrive in a safe, supportive, and vibrant environment. It has already attracted dozens of leading cryptographic companies and organizations, including Ethereum, Monetas, Bitcoin Suisse, Xapo, ShapeShift, ConsenSys, and Tezos.
Crypto currencies such as Bitcoin, Ether, Ripple etc. are storage means of purchasing power as well as means of payment. They are comparable with bank deposits but do not provide a right to be paid out in cash in a national currency. For crypto currencies, no global standardised FX Rates exist.
Crypto currencies are from a tax point of view an assessable movable. For an easy understandable declaration, the tax authority of the state of Zug suggests, to declare crypto currency assets within the asset statement and to details the stocks with a respective printout from the “wallet”.
Like other assets (bank deposits, securities, property) crypto currencies are subject to wealth tax and have to be declared at the year-end exchange rate. The federal tax authority already issues an “official” rate for bitcoins for some years. New crypto currencies are constantly added. If no such exchange-rate for a crypto currency is available we recommend to declare the asset at its initial price in CHF.
Capital gains from movable assets are basically tax exempt.
If someone qualifies as a professional trader, gains from trading in crypto currencies qualify as gains from self-employed activity and are taxed as income. In this very moment, the rules for self-employed activity as well as the respective leaflet of the federal tax authority concerning the trading of securities apply.
The mining of crypto currencies by providing computing power for money as well as the collection of Bitcoins or similar currencies leads in general to taxable income.
The development of crypto currencies can be followed intently. For right now, at least the qualification concerning taxes is largely clarified. The respective leaflet (see download section – only german version available) of the tax authority of the state of Zug gives useful advice and indications.
Do you have crypto currencies in your portfolio? Did our Blog give or the leaflet provide the necessary clarifications? If not, our tax expert Christian Lingg is most happy to give indications and help you along.
