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SWITZERLAND TAX CAPITAL GAIN

 

Capital Gain in Switzerland on Traditional and Crypto Assets: Advantages, Disadvantages, Constraints and Comparison with Other Jurisdictions

 

 

After the Italian government’s recent declarations to tax crypto at 42%, Switzerland, particularly Lugano, is one of the countries actively propagandizing to attract investors for its favorable tax legislation.

The same thing is happening both in the specialised press and among professionals, who in their search for marketing operations to attract clients, offer solutions without pointing out the limits, without comparing other jurisdictions, without considering the country holistically and not only on tax issues

 

 

Let us clarify and understand the advantages and disadvantages of choosing the country Switzerland for investors in traditional and crypto assets.

 

From a general point of view, in order to move to live in Switzerland, it is necessary to comply with the residence criterion, i.e. to stay for more than 6 months a year, in addition to the other criteria required to obtain a residence or domicile permit and the substantial elements of actually moving the centre of personal, family and economic interests.

 

In order to avoid the risk of double residence and double taxation, it is also necessary to comply with all the criteria of actual detachment from Italy or other regulated jurisdictions in order to no longer be considered resident in the country, or detachment from another country from which one comes.

 

TAX, Capital Gain in Switzerland on Traditional and Crypto Assets: Advantages, Disadvantages, Constraints and Comparison with Other Jurisdictions

 

The most tax-efficient and protective jurisdictions are those without a declaratory regime and with territorial and non-dom taxation as in Malta.

From a tax point of view in Switzerland, one is required to pay federal, cantonal and communal taxes on the basis of income wherever produced.

There is no one-size-fits-all regulation, but each area or canton where you decide to take up residence may offer different tax rates and regulations that you need to know before making a decision in order to avoid unpleasant consequences in the future.

One also has to reckon with the cost of living, which is well above many European capitals, the possibility of finding accommodation to move to and the costs associated with, for example, healthcare.

Like many European jurisdictions, Switzerland applies the worldwide taxation system, which is quite different from the territorial taxation system in force in e.g. Malta.

Switzerland applies progressive taxation on capital gains from investments, traditional or crypto, e.g. for dividend taxation, including a hefty WHT withholding tax of 35%.

These are the considerations to keep in mind when professionally comparing country systems and legislation and making one’s choices.

TAXATION for CRYPTO CURRENCIES

Italy currently applies a taxation and reporting system for crypto with currently a substitute tax at the rate of 26%, which is likely to increase to 42%.

There is also a tax monitoring obligation. Individuals, non-commercial entities and simple and equivalent companies resident in Italy that, during the tax period, hold investments abroad or foreign assets of a financial nature, which are likely to produce taxable income in Italy, must declare them in their annual tax return.
Similarly, those holding virtual currencies must declare them if they are likely to produce taxable income in Italy.

In Europe and outside of the EU, taxation in the crypto sector varies greatly, as the tax system and declaration regime in place are relevant, as well as the rates and specific rules on crypto

Here is an in-depth study on

 

FINANCIAL INVESTMENT BITCOIN CRYPTO BLOCKCHAIN TAXATION

 

In Switzerland, the premise is that cryptocurrencies are to be considered as other asset investments subject to taxation and the year-end listing tax return regime.

Switzerland has indeed adopted a regime in which capital gains from the sale of cryptocurrencies are tax-free under certain specific conditions and tax categories, but with what limits?

 

 To be exempt from taxation, capital gains must first be obtained from transactions as a Private Investor

 

In other cases, they are taxed. How?

If crypto is used as a means of payment, different taxes of up to 1% are levied between cantons.

Capital gains from crypto are taxed if staking i.e. generating rewards, mining or airdropping, or if receiving a salary in crypto.

Cryptocurrencies traded on a large scale and regularly on the basis of various criteria and factors of both frequency and amounts, are considered as professional activity and therefore taxed.

Investments in cryptocurrencies should always be recorded in the tax return and reported as assets through the tax statement available on many cryptocurrency platforms or through the wallet and contribute to progressive taxation with all other income and wealth tax

 

To summarise the conditions in Switzerland and to be a Private Investor for tax purposes:

 

1. CH applies taxation worldwide.
2. CH applies wealth-tax.
3. CH applies declaratory regime and therefore state and third parties can know where assets are.
4. In CH capital gains tax exemption applies to investments NOT of short duration.
5. In CH capital gains tax exemption applies to non-professional private investors, condition to be verified and proven to Swiss authorities.
6. In CH exemption from capital gains taxation does NOT apply to those engaged in commercial and professional activities.
7. Exemption from capital gains taxation in CH does NOT apply if the source of income is not predominant over other sources.
8. In CH the capital gains tax exemption applies to individuals, but the volume of transactions must not exceed a certain multiple of the portfolio value.
9. In CH exemption from capital gains taxation applies to individuals, but investments must not involve use of credit and/or derivatives.

 

 

FOR A COMPARISON BETWEEN COUNTRIES, TAXATION SYSTEMS AND CRIPTOVALUTE TAXATION and for Capital Gain taxation in Switzerland on Traditional and Crypto Assets in your specific case, contact MALTAWAY

 

 

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