The CVA Working Group Tax / Accounting / Structuring (CVA WG TAS) has successfully submitted on behalf of the CVA board last Friday, 15 March 2019, its statement regarding the revised first draft VAT guidance on cryptocurrencies issued on 29 January 2019 by the Swiss Federal Tax Administration (SFTA).

The statement has been prepared by Markus Vogel (Chair CVA WG TAS & Tax Partner KPMG), Monika Molnar (Member CVA WG TAS & Tax Partner MME) and Thomas Linder (Member CVA WG TAS & Tax Partner MME) and submitted with the approval of the CVA board to the SFTA. This action is another example of CVA’s diligent work on improving the state of blockchain resp. the business environment in Switzerland and also accounts for the CVA community’s demand to address the current uncertainties in respect of Swiss VAT duties for blockchain businesses.

Although the authors recognise that the revision of the first draft has been a move into the right direction, several aspects of the draft VAT guidance should be reassessed. An outline of the most material revision claims by the CVA WG TAS can be found below:

  • Missing reflection on the cybernetic and autonomous aspects of a decentralised, public open-source blockchain system
  • Necessity for a functional approach towards the classification of blockchain tokens under the consideration of the synchronisation with the respective legal effects:
    • Native tokens
    • Counterparty tokens
    • Ownership tokens
  • Differentiation between crowdfunding activities such as ICOs and other transactions involving blockchain tokens (transfer of blockchain tokens) for VAT purposes
  • VAT treatment of ICOs should follow a case-by-case assessment and cannot be generalised
  • Issuance of blockchain tokens should only result in a VAT liability in case there is a supply of services or goods in return for the provision of (crypto)currencies
  • VAT treatment should basically follow the principles applied to the treatment of the referenced non-tokenised transaction(s) (e.g. voucher token should be dealt as a voucher from a VAT perspective)

You can read the entire statement from the Working Group here [in German].

The CVA WG TAS is keen on hearing back from the SFTA and looks forward to the further finalisation of the VAT guidance on cryptocurrencies. Once sufficient clarity has been reached, the CVA WG TAS will gladly organize respective community events.