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FTA Working Paper on Crypto Currencies and ICOs – Lexology


The emergence and spread of digital means of payment in the form of crypto currencies – such as Bitcoin and numerous issuances of coins/token in the context of ICOs (Initial Coin Offering), ITOs (Initial Token Offering) or TGEs (Token Generating Event) – have recently raised various questions about the tax treatment of these values.

This working paper outlines the practice developed to date by the Federal Tax Administration (FTA) on the basis of the existing tax laws. This tax practice is a snapshot and is basically based on the facts and transactions submitted to the FTA by the end of May 2019. It can be assumed that not all tax law questions have yet been asked and conclusively answered (e.g. the free transfer of equity and participation tokens [cf. sections 3.3. and 3.4 below] to salaried employees). The practical provisions of the FTA and the cantonal tax authorities will therefore have to develop further and take account of new constellations in the area of ICOs/ITOs. If necessary, the FTA will also notify them accordingly. The categorisation of coins and tokens used in this working paper is based on FINMA’s guidance for questions of subordination regarding initial coin offerings (ICO) of 16 February 2018.

The comments in this working paper are divided into two parts.

  • The first part describes the tax treatment of crypto currencies in the form of purely digital means of payment (hereinafter referred to as native tokens or payment tokens) held by investors as private assets.
  • The second part deals on the one hand with the tax consequences of coins/tokens issued in the context of ICOs/ITOs with monetary rights vis-à-vis a counterparty (hereinafter asset-backed token) and on the other hand with the issue of utility tokens. The second part highlights both the level of the investor (private assets or, if applicable, gainful employment) and that of the issuer.

At the request of cantonal tax administrations, the present working paper also addresses issues relating to exclusively cantonal wealth tax.T

he determination of taxable income is based on the income statement in conformity with commercial law (cf. Art. 58 para. 1 let. a of the Federal Act of 14 December 1990 on Direct Federal Tax; DBG; SR 642.11), provided that no tax law correction provisions are to be observed in the commercial profit statement (so-called principle of authoritability). Expenses not booked under commercial law cannot be claimed under tax law.

The working paper can be downloaded here (in German).

 



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