Swiss tax law won’t change in response to the blockchain, says, lawmakers

Swiss tax law won’t change in response to the blockchain, says, lawmakers

Blockchain
June 30, 2020 Komal Joshi
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Switzerland’s Federal Department of Finance has determined that the rapid development of blockchain and corresponding financial instruments doesn’t warrant changes to existing tax laws. The country’s existing legislation can accommodate the nascent technology. According to a press release, the Swiss Federal Council first demanded a report on the subject from the Department of Finance on
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Switzerland’s Federal Department of Finance has determined that the rapid development of blockchain and corresponding financial instruments doesn’t warrant changes to existing tax laws. The country’s existing legislation can accommodate the nascent technology. According to a press release, the Swiss Federal Council first demanded a report on the subject from the Department of Finance on December 7, 2018, to examine the potential impact of DLT (decentralized ledger technology) and blockchain on the country’s economy. 

Swiss tax laws compatible with blockchain

The lawmakers displayed their findings to the Council during a meeting on June 19, ending that Swiss tax laws are fully compatible with blockchain technology—at least for now. Existing legislation has “proved its worth” concerning income, profit, wealth, and capital gains taxes, the report stated, while the country’s recent VAT law “covers arrangements based on distributed ledger technology (DLT) and blockchain.” It suggested that “no legislative action is necessary as regards special tax provisions for the new instruments.”

The report’s authors also suggested that withholding tax coverage on income from equity and participation tokens should not be extended, “due to Switzerland’s adverse effects as a business location.” The report also recommended making modifications to the law around transfer stamp tax “due to uncertainty about the type and scope of the future use of DLT trading facilities.”

Switzerland takes hands-on approach to crypto

Switzerland’s attitude toward crypto is hardly hands-off, though. In February this year, the country tightened its cryptocurrency regulations to hinder money laundering, reducing the threshold for unidentified crypto purchases from 5,000 Swiss Francs to 1,000 (around $1,023). At the time, the regulators called “heightened money-laundering risks” as the primary reason for this decision.

Switzerland is also the first nation to strive to regulate cryptocurrency banking, with Sygnum, one of two crypto asset banks to be awarded an operational license by the Swiss financial regulator FINMA, reporting “overwhelming” demand after opening its doors last autumn.

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