One of the first to comment on the declaration of Bitcoin and other cryptocurrencies were the Lucerne tax authorities. In their newsletter of 15th November , the authorities take over MME’s position that Bitcoin holders are legal owners of the cryptocurrency in the meaning of the property law. Zug followed with similar guidelines on 30th November Therefrom, Lucerne and now also Zug draw the conclusion that Bitcoins & Co. are subject to net wealth tax.

The cantons require that cryptocurrencies are listed in the tax return on a separate form (i.e. the “Wertschriftenverzeichnis”), together with shares, bonds and the like. The reason being that the knowhow about cryptos within those tax authorities is concentrated in the same department dealing with the securities - separately from the rest of the tax return. However, the procedures among the cantons are not aligned. For example, the canton of Basel Stadt has assessed crypto assets in line with their legal qualification as ‘cash, precious metals and other assets’ (line of the declaration) which seams systematically correct, unless the tokens have characteristics of debt or equity instruments.

According to the Lucerne newsletter and the Zug guidelines, prove of ownership can be provided by a print-out of the wallet(s) at year end.

Since , the Swiss Federal Tax Authorities publish an exchange rate for Bitcoin. Lucerne is using this rate for net wealth tax purposes. Their guidelines state that all other tokens, for which no such rate is published, will be taxed at cost. Further, a deduction from the cost price shall be possible taking into account (among others) a lack of regular trading. Zug on the other hand requires from the tax payer to use the closing price (as of 31th December) of the same stock exchange that has been used for the transactions. Only if no price is available, the cost price is the basis for net wealth tax.

Unfortunately, neither canton allows a general deduction to compensate for the high volatility of the markets. Valuation per year end and the respective net wealth tax burden therefore includes an element of chance.

Zug and Lucerne are in agreement that proceeds from mining and the likes are taxable business income. This holds true whether the tax payer uses his own mining rigs or whether his is an investor in a mining project. Further, Zug explicitly mentions that ordinary salary and revenues of self-employed persons paid in Bitcoin or any other cryptocurrency are subject to tax and must be translated into CHF using the exchange rate of the day the salary/revenue is paid. It is to be assumed that Lucerne and the other cantons will handle this likewise.

Capital gains on cryptos, on the other hand, are subject to tax only if the relevant assets are business assets. This concerns all individuals which qualify as professional traders. The calculation of the capital gain would have to be in line with the relevant accounting rules. In this regard, it is interesting to note that ExpertSuisse (‘Ausgewählte Fragen und Antworten zum neuen Rechnungslegungsrecht’ in the version of 7th December ) has already published guidelines for Bitcoin-accounting.

According to the Lucerne and Zug authorities, they will use the same criteria as they use for securities traders to distinguish between private and professional trading (i.e. Federal Tax Authorities’ circular letter no. 36 of 27th July ). It is difficult to fully agree with this point of view. There are significant differences between securities and cryptocurrencies: the nervous markets, the huge number of ICO’s and the fact that cryptocurrencies (other than shares and bonds) have no counterparty and no underlying assets, just to name a few. Thus, all investors are forced to manage their portfolio very actively. For this reason, it seems not appropriate to compare transaction volumes and number of transactions with the thresholds defined for professional securities dealers.

With their publications, the Lucerne and Zug tax authorities have taken a leading position. Their point of view is reasonable even if some aspects should be discussed again.

* Christoph Rechsteiner | Thomas Linder

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