Switzerland's Commitment to Crypto Taxes

The Swiss government is gearing up its tax policy on cryptocurrencies. On May 15, May 15, 2024, the Federal Council declared that it would conduct a consultation process for the Automatic Exchange of Information (AEOI) to cover crypto-assets.

This decision will make Switzerland more internationally aligned with other countries in the effort to handle digital tax evasion.

The AEOI previously focused on financial accounts. In the modern era, there are more methods of tax evasion. The Organization for Economic Co-operation and Development (OECD) is resolving this matter by developing the Crypto-Asset Reporting Framework (CARF).

The consultation draft proposes that CARF be implemented with a revised Common Reporting Standard (CRS). Switzerland is declaring that it will observe a high level of tax transparency and compatibility with the OECD's international standards.

Thomas Schinecker's Caution

While the proposed expansion strengthens tax compliance, some industry leaders express concerns about its impact on Switzerland's competitiveness. In a recent statement, Thomas Schinecker, CEO of pharmaceutical giant Roche Holding AG, cautioned against mirroring European tax policies.

"Switzerland has taken a step back by adopting the minimum OECD tax," Thomas said in Basel on Monday. When asked about the country's ability to conduct business, he pointed out that Germany and France are high-taxing countries and underlined that the government should compete with China, Dubai, and India.

The Road Ahead

The Federal Council's proposal is open for public consultation until September 6, 2024. This period allows stakeholders, including industry representatives, tax professionals, and the public, to voice their opinions and influence the final design of the AEOI extension.

The new AEOI rules are expected to be effective on January 1, 2026, subject to parliamentary approval and successful implementation. This timeline allows relevant parties, including crypto-asset service providers, to adapt their systems and processes to comply with the new reporting requirements.

Integrating crypto-assets into the AEOI system represents a significant development for Switzerland's financial landscape.

It remains to be seen how the broader cryptocurrency community will receive this move and whether it will strike the right balance between fostering innovation and ensuring fair taxation.

"Switzerland has taken a step back by adopting the minimum OECD tax," Thomas Schinecker, CEO of Roche Holding AG.