Switzerland will not amend its tax code to suit blockchain, with the sector already adequately served by existing financial and securities laws.
According to the Swiss Department of Finance, blockchain and digital currencies are “fully compatible” with existing legal frameworks, with no requirement for specific legislation for the sector.
The position was declared in a report recently published by the department, the culmination of a year-long research project to identify whether existing tax structures can be applied to the digital currency and blockchain sectors.
In a notice on their website, lawmakers said existing legislation had already “proved its worth” in taxing digital currency transactions and holdings.
“As regards income, profit, wealth and capital gains taxes, the existing legislation has proved its worth. Existing VAT law also covers arrangements based on distributed ledger technology (DLT) and blockchain. Therefore, no legislative action is necessary as regards special tax provisions for the new instruments.”
The report goes on to look at withholding tax on income from “equity and participation tokens”, suggesting that no further expansion was necessary for taxing digital currency gains.
“Another area examined was the collection of withholding tax on income from equity and participation tokens. Due to the adverse effects for Switzerland as a business location, among other things, the report recommends that withholding tax coverage should not be expanded. As regards transfer stamp tax, it advises against legislative amendments at present, due to uncertainty about the type and scope of the future use of DLT trading facilities.”
The taxation of digital currency is an increasingly high profile concern of governments and tax authorities worldwide, with a number of countries choosing to write new laws or issue clarifications as to how digital currency income and gains should be taxed.
While some countries have created amendments to existing rules, the Swiss approach is an example of one of the world’s leading financial markets and business jurisdictions opting for the same treatment for digital currency as other types of income.
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