Corporate Finance News

Mercredi 17 Juin 2015

No VAT on Bitcoin in Switzerland

We have excellent news from the Swiss Federal Tax Administration (ESTV): no VAT applies to Bitcoin in Switzerland.

“This is excellent news for Bitcoin in Switzerland as it provides the legal certainty we need to professionally operate our business,” Niklas Nikolajsen, CEO of Bitcoin Suisse AG, comments.

In February 2014, a group of three Swiss Bitcoin organizations jointly wrote a formal inquiry to the Swiss Federal Tax Administration (FTA) to clarify the legal situation of Bitcoins with regards to VAT. Fundamentally, this is about the question whether the transfer of Bitcoins constitutes a delivery of goods or a service. The fortunate answer from the federal tax administration is: neither.

Thus, Bitcoins are treated like other means of payment. A company that sells Bitcoins does not need to charge VAT. Like other currencies, Bitcoins are recognized as consideration when using them for the purchase of goods or services. This means that paying for a pizza with Bitcoins is not a barter trade and cannot trigger double-taxation. Trading Bitcoins for Swiss Francs is seen as the exchange of legal tender against a non-official means of payment - similar to the exchange of Swiss Francs for Euros. Furthermore, the transaction fees charged by companies such as Bitcoin Suisse AG are covered by the exemptions in article 21 section 2 of the Swiss VAT act and are therefore VAT-free.

Luzius Meisser, president of Bitcoin Association Switzerland, states: “This is the most reasonable way to classify Bitcoins in the context of VAT and we are fortunate that the tax administration agrees with our view. Bitcoin is a currency, and thus should also be treated like a currency.”

“Treating Bitcoin payments just like any other payment option is a huge milestone for the Swiss Bitcoin economy, and enriches the global digital money ecosystem,” Bernhard Kaufmann, the General Manager of Moving Media GmbH, added.

For the European Union, which Switzerland is not part of, this question is still pending with the European Court of Justice holding a hearing on the matter on June 17th, according to . Mathieu Buffenoir, vice-president of Bitcoin Association Switzerland, comments: “We hope that the Swiss decision can serve as an inspiration for Europe.”

Disclaimer: technically, this answer is only legally binding to the parties that wrote the inquiry - but a differing answer to others is unlikely thanks to the constitutional principle of equality before the law. This decision could also be challenged in court, which no one intends to do. Also, this press release was neither written by nor checked by lawyers.

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