earn everything about the taxation of cryptocurrencies, NFTs, and DeFi in Switzerland. From tax-free capital gains to taxable income from staking and mining, including tips for filing your tax return. Avoid tax pitfalls and optimize your crypto investments. With the upcoming Bitcoin halving in April 2024, many cryptocurrency owners are eagerly anticipating its potential effects. Historical data shows that previous Bitcoin halvings have brought positive outcomes for holders. This article focuses on the tax implications in Switzerland associated with this event.

For further information, our experts are at your disposal. Contact Smart eTax.

Tax Basics for Cryptocurrencies in Switzerland

• Capital Gains: In Switzerland, capital gains from trading cryptocurrencies are generally tax-free, provided that the trading activity is not classified as professional. It's crucial to understand the criteria to avoid any tax disadvantages. The key term here is "professional trader."

• Capital Losses: While capital gains are tax-free, capital losses from cryptocurrency trading cannot be used to offset taxable income. This means losses cannot be deducted from your taxable income.

• Staking, Lending, and Liquidity Mining: These activities are considered taxable capital income. Earnings must be declared in your tax return. Accurate documentation of all transactions and income is essential for proper taxation.

What Is a "Professional Trader"?

A professional trader, or "Effektenhändler," is someone who regularly earns income from trading securities (including cryptocurrencies) and must declare this as taxable income in their tax return.

According to Art. 2 Bst. d BEHG, a professional trader is defined as individuals, legal entities, and partnerships that buy and sell securities (including cryptocurrencies) for their own account for short-term resale or on behalf of third parties. This applies in both primary and secondary markets, including those who create and offer financial derivatives.

When Are You Considered a Professional Trader?

• You regularly earn profits from trading securities.
• You finance your living expenses through securities trading.
• You frequently buy and sell derivatives.
• You generate short-term and speculative profits.
• You professionally trade in derivatives.

Practical Tip:

A screenshot of your crypto wallet balance at the end of the year (December 31) is generally sufficient as proof for the cantonal tax authorities.

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Tax Office Definition for Cryptos (Zurich):

• Digital units of account
• Can be used as a means of payment or investment
• Cryptocurrency units (coins) are not securities
• Dependent on the underlying protocol and technology
• Cryptocurrencies like Bitcoin are economically comparable to cash or precious metals
• This applies specifically to Bitcoin, Ethereum, and similar cryptocurrencies

Taxable and Non-Taxable Crypto Transactions:

• Non-Taxable: The simple purchase and sale of cryptocurrencies, where a capital gain is made, is tax-free. This provides an attractive tax treatment for cryptocurrencies in Switzerland.
• Taxable: Income from staking, lending, and liquidity mining is taxable and must be declared as income from movable assets. DeFi activities, in particular, require precise documentation for tax purposes.

Guide to Declaring Cryptocurrencies:

• Tax Return Declaration: Cryptocurrencies must be declared as taxable movable assets in your wealth tax declaration. The value is based on the end-of-year market price.
• Tips for Proper Declaration: Carefully document all transactions, including purchases, sales, staking, and mining income. Using tax software or consulting a tax advisor can help you avoid errors.

Special Cases for Cryptocurrencies in Switzerland:

• Airdrops and NFTs: Income from airdrops must be declared. NFTs are more complex, as their tax treatment is still being clarified. It's advisable to declare NFTs at the purchase price and document all transactions carefully.
• Professional Trading: Those who trade extensively and rely on it for their livelihood may be classified as professional traders, resulting in all capital gains becoming taxable (see "professional trader" section above).

Airdrops – A Brief Overview:

Airdrops refer to the free distribution of digital assets like cryptocurrencies or NFTs, often as part of a marketing strategy. Airdrops can occur at various stages of a crypto project, and the conditions for participation vary. Recipients can choose to hold or sell the received digital assets. Historically, some airdropped cryptocurrencies have significantly increased in value, leading to substantial profits for recipients. These free coins must be declared as income in your tax return.

These comprehensive insights offer a deeper understanding of the tax aspects of cryptocurrencies in Switzerland and are designed to help investors file their tax returns accurately and efficiently. For further information, our experts are at your disposal. Contact Smart eTax.