The cantons of Switzerland have made dealing with Crypto Valley that the citizens are allowed to pay taxes in Bitcoins and Ether. It was reported that both the firms and individuals are allowed to pay the taxes that fall within 100,000 Swiss francs ($109,670). The cantons have roughly 127,000 people, which have chosen government services that offer Bitcoin payments.
This is made possible, by the collaboration between, the Canton and crypto Broker Bitcoin Suisse Ag, which is located on Zug. Bitcoin Suisse before this collaboration has partnered with Swiss establishments in Zermatt to make the citizens who pay tax, utilizing Bitcoin payment. The founder of Bitcoin Suisse, Niklas Nikolajsen, once stated that the Bitcoin payment is nothing contentious and it can be a mainstream payment. During this CoronaVirus epidemic, many of the local Cryptocurrency companies suffered. But by rejecting the 100 million franc request from Canton of Zug, the Swiss government helped local Cryptocurrency firms to overcome this situation.
What is a crypto valley?
To establish the Cryptocurrency payment and Blockchain technology, the crypto valley association is sustained by the government of Switzerland. The Crypto valley association was established in Zug of Switzerland. Many numbers of cryptocurrency firms are located in Zug. The main feature of Crypto Valley is the Blockchain, where it gathers many of the Blockchain companies, speakers, and experts. Crypto Valley has also organized Blockchain Summit, where blockchain competitions and presentations take place. In the recent Blockchain Summit that was held on April 26th, 2018 Members of the European parliament, Aragon project’s co-founder, and Tezos Foundation president took part in the events.
Zermatt-a city of Switzerland accepts taxation in Bitcoins
Zermatt is the second region of Switzerland, which allows taxpayers to pay tax in Bitcoins. To disclose this option to the public, Zermatt has made collaboration with Bitcoin Suisse, which is a famous Cryptocurrency fiscal service in Switzerland. Due to this partnership, the Zermatt officials were able to accept the Bitcoins as the tax payment and were able to convert them to francs and transfer them as flat currency to the bank account of the municipality.
This option allows the local taxpayers of Zermatt, to install a point-of-sale tool in the Zermatt town hall to pay the taxes in Bitcoins or they can make the payment through the online payment portal. But before making an online payment, the taxpayers must directly apply for an application in Zermatt Tax Office for making crypto payments. The mayor of Zermatt, Romy Biner-Hauser, has stated that this new tax payment option has tremendously raised the demand for bitcoin tax payment. Bitcoin Suisse stated that Zug was the first region in Switzerland, to accept the tax payments in Bitcoins in the year 2016. Switzerland is highly increasing its Crypto financial services utilizing Bitcoins. But some countries are feeling that they might be risky as there is a frequent price value fluctuation in Bitcoins.
Switzerland rejects $103 Million of COVID-19 Relief for Crypto Valley
It was reported that Heinz Taennler for helping out the local Cryptocurrency firms and blockchain companies, in the current COVID 19 pandemic situation, has requested 100 million francs from the Swiss government. But the Swiss government rejected the request. While several COVID-allied applications were rejected by the centralized government, Crypto Valley is the only one to extend financial support. The start-ups of Crypto Valley can apply for loans at any bank, which will be covered by both the Zug Canton (35%) and the Federal government (65%). Through the federal platform, the loan applications can be submitted from May 27, 2020, to August 31, 2020. These requests will be later inspected by experts from other government agencies and administrations.
As many of the equity investors are withdrawing their wager due to the COVID pandemic, so more 80% percent of companies, in Crypto Valley, stated that this year it would be a difficult situation for them. Due to this pandemic effect, almost 57% of local firms in the Crypto Valley ecosystem have displaced their employees.
Cantons in Swiss makes Bitcoin-based taxation possible
Bloomberg is one of the cantons of Switzerland, which allows the companies and individual firms to pay the tax in Bitcoins. Bloomberg is Zug based and more than 127,000 people in Zug regions, made a partnership with Bitcoin Suisse, which made the Bitcoin tax payment possible and converted them into Swiss Francs and transferring the amount to the Swiss government banks. Since 2016, Zug, which is renowned for its low commercial taxes, accepts the tax payments in Bitcoins, from certain governmental services.
The Cryptocurrency finance in Switzerland has a good lead, due to flexible rules and regulations and a superior approach for the digital currency. But many banks in Switzerland are not offering the Cryptocurrency as well as blockchain services to their customers, due to frequent price value fluctuations. But it is almost accepted that making Bitcoins as the mainstream of payment is nothing wrong.
Paying taxes on Bitcoins
Bitcoins usage has been tremendously increasing in many of the developed countries. Some countries may consider Bitcoin as a currency; some may consider it as a foreign currency or some may consider it an investment. The term varies from country to country as per the country’s rules and regulations. Recently the cantons of Switzerland had initiated a new option of paying taxes in Bitcoins. The tax calculation can be made based on the following factors:
- Trading Cryptocurrencies
- Mining Cryptocurrencies
- Selling Cryptocurrencies
- Possessions of Cryptocurrencies
Investing by means of CFD trading account or buying/selling of Bitcoins through an exchange is the process of trading Cryptocurrencies.
Possessions of Cryptocurrencies
If you possess the Cryptocurrency from 2011 and still you hold them, you will not be taxed just for possessing them!
If you are selling the Cryptocurrency in exchange for some goods or a FIAT currency, then you are taxable as per Capital Gains Tax (CGT). Based on your current standing, the rate of tax may vary. The taxpayers of the Basic rate must pay 10 percent of their capital gains, whereas the high rate taxpayers must pay 20 percent of their capital gains. As of the 2018/2019 tax year, there is a tax exclusion limit of 700 pounds for individuals.
For example, if you had bought 2 Bitcoins for 200 Pounds in 2011. If you sell them today, the rate would be 20,000 pounds. So the profit you earned is 19,800 pounds. As per the taxation rule, the yearly tax exemption is 11,700 pounds. So, after deducting that from your income, you would be left with 8,100 pounds, still, you are in profit!
Mining cryptocurrencies involve miners to solve very complex mathematical problems. Some do this as a hobby and still, they would be imposed on taxation. Whether you do the mining as a hobby or large depending upon the size, the taxation process will vary.
It is always best to start mining as an individual investor. Based on the income, you would be paying income tax and national indemnity. Once you have gained enough, you can start as a company and get registered with VAT. Being a sole trader, you will be able to pay taxes which will be considerably low.
Thus this article has given a deep insight into paying taxes in Bitcoins and the trend getting more spread in the cantons of Switzerland.