Switzerland is considered a favourable location for cryptocurrency holders, alongside other non-traditional Western European countries such as Cyprus, Estonia, Malta, and Slovenia, where digital assets like Bitcoin enjoy minimal tax burdens. In Switzerland, capital gains from cryptocurrencies will not be taxed in 2024, continuing its reputation as a tax haven.
Capital Gains and Crypto Taxation
Switzerland generally does not impose taxes on capital gains, including those derived from cryptocurrencies. As of 1 March this year, capital gains on cryptocurrencies remain exempt from taxation if they are used for basic purposes, such as buying and selling digital assets. This exemption applies specifically to individuals who use cryptocurrencies similarly to traditional payment methods, such as buying and selling goods or services.
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Taxation Landscape Across Europe
In Europe, the taxation of cryptocurrencies varies widely, with rates ranging from 0% to 52%. While the average tax rate is around 19%, there are significant differences across national tax regimes. For example, in Germany, the tax rate on cryptocurrency gains can reach up to 50.5%, and in Denmark, it can go as high as 52.06%. In contrast, Italy imposes a flat rate of 26% (with exemptions for gains under €2,000), and France taxes gains at 30% (with an exemption if total taxable sales are less than €305).
Understanding Switzerland's Tax Policy
The Swiss Federal Tax Administration (FTA) provides a clearer picture of the country's approach. For individuals, the tax exemption applies to the "buying and selling of payment tokens," which are treated similarly to transactions involving traditional currencies. In this context, any gains and losses from such transactions are classified as tax-exempt capital gains or non-deductible capital losses when they occur within the private wealth of individuals.
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However, there are two scenarios where cryptocurrencies may still be subject to taxation:
- Asset-Based Taxation: Cryptocurrencies are taxed if they are used as a means of payment. The tax rate varies depending on the canton, ranging from 0.3% to 1%.
- Income Tax: Capital gains from cryptocurrencies may also be taxed at the federal, cantonal, and municipal levels, up to 11.5%, in certain circumstances. These include cases where individuals are involved in activities such as staking, mining, or airdropping cryptocurrencies, generating earnings in cryptocurrencies, or receiving salaries in the form of digital assets.
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