How Do You Handle Cryptocurrency Tax Reporting?

Taxes
1

Hi everyone,

I’m seeking advice on how to properly declare my cryptocurrency holdings and transactions for tax purposes. My accountant told me that I need to declare them, but I’m a bit lost on how to create a comprehensive report.

Here’s my situation:
• I keep track of all my movements using CoinMarketCap and CoinGecko.
• My cryptocurrencies are stored partly in a Ledger wallet and partly on a DeFi platform.

I’m unsure how to generate a report with my current balances. Should I compile everything manually, or is there a tool or method that can simplify this process?

Additionally, I’ve had losses in previous years (e.g., FTX, LUNA crashes :smiling_face_with_tear:). Are these losses deductible or usable to offset gains for tax purposes? If so, how should they be documented?

Any advice or resources would be greatly appreciated. Thank you in advance for your help!

2

For tax purposes you obly need to state the end of year balance of your cryptos and attach the statements of your accounts, that’s it.

No. You anyway don’t pay taxes on your crypto gains, same as for stock capital gains. Only if you are a professional investor.

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3

Well first thing you should think about is what’s your explanation if Tax office asks you why you didn’t declare crypto balances last year

If the amount is significant, then you would need to be prepared

However if all your gains came this year then it’s best to declare asap to avoid drama next year.

Capital gains in Switzerland are not applicable for these assets. Only income is taxed but I think most crypto coins have no income. So tax liability should be minimal.

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4

Proceeds from lending and stacking must be declared as income.

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5

It may look clumsy pragmatic, but I would treat crypto assets in private ledgers as mobile wealth and add it in section 4 of the tax declaration “Vermögen im In- und Ausland” under “Bargeld, Gold und andere Edelmetalle”.
For Coinbase, I just submitted the total assets on Dec 31 as if it were a cash account (even though I received some income from learn-to-earn and staking).
For Swissquote I stopped staking well before Dec 31 to receive a “clean” position report. If they manage to somehow add up the meager staking returns in a concise income document, I will be happy to report that to tax authorities.

And if later the tax authorities up their crypto game I might have to bite the bullet and somehow add up all the little amounts in order to re-state my income for the previous years. Maybe pay a tiny bit of additional taxes.

6

In the end, when keeping track with an updated portfolio, you also include data for assets not purchased, like staking, right?

7

So, does no one know how to create an end-of-year report when holding cryptocurrencies on a Ledger?

9

Personally i just put the total amount and no „proof“. In 4 years of doing it this way in ZH they have never asked for any statements of some sort.
So i dont think its required. My reasoning is that its treated similar to cash or physical gold. There you couldnt prove how much or little you have either. If you lie its fraud anyways so a screenshot or similar things doesnt change much.

10

You are probably right. I found this document from the federal tax authority, but as it is the task of the cantons to obtain relevant information, it may be another year or two until we (individual tax payers) get better guidance with the annual tax declaration.

Some content (relevant for individuals)

  • Difference between private and commercial activities (3.1)
  • Income tax for staking income (4.2.1)
  • Capital gains on crypto are exempt from tax (4.2.2.1.3)
  • Wealth tax for crypto holdings (4.2.2.1.4)
  • Market price published annually for 20 largest crypto currencies (6.2)
  • Air drops most likely qualify as income (11.2)
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12

Hmm, interesting and scary too - as so far I was declaring my crypto just like cash etc. I hope it is still the right way in Vaud…

13

If you mine/stake you should declare as income (that’s not new I think). If not it’s indeed similar to cash.

14

I don’t, I just bought and that’s it.

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15

Hi All, I am also in a similar situation. I started only in the past two years having to do tax declaration and discovered last December by following in this forum that I am suppose to declare also cryptos. Now I am a bit confused, as I hold a small amount of cryptos which was never staked, mined or sold, but just stored.
If I understood correctly from this thread, this should still be declare it in the tax declaration as cash asset? If yes, beside declaring it in this year tax return, is there any proactive action to be taken in these cases (as I should have declared previously) like informing directly the tax office?

Thanks a lot for the feedback

16

In ZH software there is a specific section for Crypto which has major coins. But otherwise just declare it under cash assets and attach the statement from wallet

17

Thanks for the feedback, then that amount would be added to my total wealth and taxed according to wealth tax but not income tax, is that correct?

18

Yes.

19

Yes. However if the amount is huge, you might be asked for explanations

20

Unfortunately it is not huge :sweat_smile: but I would like to calculate ahead how much to put on the side to pay taxes. Thanks again :slight_smile:

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21

My accountant actually asks me to provide him information about date of purchase, price at purchase, price at end of the year so that the capital gain might be calculated. He said it is needed for the “lifestyle calculations”. ChatGPT translates it as “Vermögens- oder Konsumrechnung”. Is it necessary at all? Cause I have tons of small txs on DEX so it is hard to report.

22

in the situation you described, no