By the Tax/Accounting/Structuring Working Group

On 27 August 2019, the Swiss Federal Tax Administration (SFTA) has published a working paper on cryptocurrencies and ICOs/ITOs in relation to respective wealth, income and profit tax, withholding tax and stamp duty considerations. The working paper can be downloaded here (German).


This publication follows up with previous publications by the SFTA on the Swiss VAT guidance for supplies involving cryptocurrencies & ICOs in June 2019 as well as the accounting guidelines published by EXPERTsuisse for utility tokens and asset tokens. 

The position shared within this working paper is based on the practice maintained by the SFTA to date and therefore represents a snapshot of the transactions submitted to the SFTA by end of May 2019. Further, the token categorization is aligned to the guidance published by FINMA on 16 February 2018. Having said that, it must be assumed that there are still open questions in respect of particular transaction circumstances which require conclusive answers and constitute “work in progress”. 

The CVA Working Group Tax / Accounting / Structuring (CVA WG TAS) appreciates the systematic efforts of the SFTA shared within this working paper as it helps to further provide transparency on the current tax practices. However, the working paper contains several gaps, assumes very specific, non-generic facts and circumstances and in turn, leaves a lot of blank spots. This asks for further clarifications.  

In order to provide the community with our perspective on this working paper, we as the CVA WG TAS gladly share below respective comments prepared by Thomas Linder / MME.  



The SFTA distinguishes between Native / Payment Tokens without legal claim, Asset-backed Tokens with a contractual claim to repayment or cash payment and Utility Tokens with a contractual claim to use a digital service. In the case of Asset-backed Tokens, a distinction is also made between Debt, Equity and Participation Tokens, although all (digital) participation rights under company law are expressly excluded from these definitions.

It is thus based on FINMA’s token triad of Payment, Asset and Utility Tokens. However, its ICO Guidelines from February 2018 are a purely purpose-oriented, regulatory classification in which the Anti-Money Laundering Act (payment/means of payment), the securities regulations (asset/investments, above all also participation rights under company law) and a category without financial regulations (utility/usage) are represented. Therefore, the use of similar terms is more confusing than clarifying. The same can also be said of the practical notices issued by the VAT authorities in this area, which also use different definitions. A more comprehensive, cross-agency system would have been more effective and easier to understand.



It is also astonishing that the SFTA also takes a stand on the cantonal wealth tax and influences the (cantonal) valuation of digital assets with its price lists. In our opinion, the specification of tax values without an objectively ascertainable market value (e.g. on a regulated stock exchange) is definitely not within the competence of the SFTA and is questionable both formally and in terms of content. The proposed valuation of highly volatile assets on the reporting date would then hardly correspond to the long-term realizable, taxable market value. It is significant, however, that the cantons largely comply with these conditions without any discernible resistance.



Certain issues, such as the valuation of wage payments in the form of tokens or the distinction between private asset management and self-employment, are forced into certain ( wanted ) forms without a thorough examination of the facts. For example, an “analogous application of the criteria according to Circular No. 36 on commercial securities trading” to native tokens makes no sense at all, since these are to be treated as transactions with conventional means of payment (currencies) and are therefore not securities. In practice, however, the differences between securities and currency trading are so immanent that “analogous application” is diametrically opposed to the content and purpose of KS 36.



In principle, the token types described by the SFTA are not subject to withholding tax due to the lack of a legal basis. This is to be welcomed.

However, the FTA reserves the right to levy withholding tax “if the two following cumulative thresholds are not met:

  • The shareholders of the issuer may hold a maximum of 50% of the issued token at the time of the respective due date. 
  • The defined profit participation quota must result in payments to the token holders not exceeding 50% of the EBIT.”

Unfortunately, this provision is worded in a cumbersome manner and leaves open whether the “safe haven” is violated if both or only if one of the thresholds is not met.

At this point, we would also like to refer to the general rules concerning hidden profit distributions. These are payments to shareholders or to related third parties who have their legal basis exclusively in the ownership relationship and are not openly disclosed as such in the accounts. An obvious, recognizable disproportion between performance and consideration is assumed. A contractual payment to shareholders, which is also made to unrelated third parties under the same conditions, can, therefore in our opinion, hardly qualify as a hidden distribution of profits. The thresholds mentioned can be used as indications. However, the fulfilment of the other requirements is absolutely necessary for the existence of a hidden distribution of profits.



It is correct that the token categories mentioned are not subject to securities transfer tax, even in the case of transactions via securities dealers, provided that they do not refer to taxable securities within the meaning of the Stamp Duties Act.


The CVA WG TAS will keep you up-to-date in respect of any upcoming developments in this respect. Stay tuned!