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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11

Here is what SZ refers to (only in german): SSK_Kryptowaehrungen_ab_2023_mj.pdf

Following is stated in the browser eTax solution from SZ:

Kryptowährungen

Kryptowährungen sind digitale Zahlungsmittel bzw. Vermögenswerte, die wie andere Vermögenswerte in der Steuererklärung anzugeben sind.

Kryptowährungen im Privatvermögen sind unter „übrige Guthaben“ im „Wertschriften- und Guthabenverzeichnis“ aufzuführen:

  • Vermögen: Kryptowährungen unterliegen zum Jahresendkurs zusammen mit den übrigen Vermögenswerten (Bankguthaben, Wertschriften, Fahrzeuge, Immobilien) der Vermögenssteuer. Für die gängigsten Kryptowährungen ermittelt die Eidgenössische Steuerverwaltung (ESTV) seit einigen Jahren einen «offiziellen» Kurswert als Durchschnitt von verschiedenen Handelsplattformen. Hat die ESTV mangels regelmässigem repräsentativem Handel keinen «offiziellen» Kurswert festgelegt, so ist die Kryptowährung zum Jahresendkurs derjenigen Handelsplattform einzutragen, über welche die Kaufs- und Verkaufstransaktionen ausgeführt werden.
  • Einkünfte: Kapitalgewinne auf beweglichem Privatvermögen, zu welchem auch Kryptowährungen gehören, sind in der Regel steuerfrei. Dementsprechend können auch Verluste auf Kryptowährungen steuerlich nicht abgezogen werden.

Unter anderem unterliegen Kryptowährungen der Einkommenssteuer aus folgenden Gründen:

  • Erhält jemand als angestellte Arbeitnehmerin bzw. Arbeitnehmer Lohnzahlungen oder Gehaltsnebenleistungen in Form von Kryptowährungen oder Tokens, so handelt es sich um steuerbares Erwerbseinkommen, welches auf dem Lohnausweis auszuweisen ist. Als Betrag aufzuführen ist der Wert zum Zeitpunkt des Zuflusses umgerechnet in Schweizer Franken.
  • Erzielt jemand Erträge durch Zurverfügungstellung seiner Kryptowährungen (z. B. Staking, Validator, Nominator etc.), so gelten die erzielten Erträge als steuerbare Vermögenserträge. Diese Erträge sind pro Währung im Wertschriftenverzeichnis zu deklarieren. Massgebend sind die jeweiligen Werte am Tag des rechtlichen Anspruchs kumuliert für die betreffende Steuerperiode.
  • Vereinnahmt eine selbstständigerwerbende Person Kryptowährungen als Entgelt für erbrachte Lieferungen oder Dienstleistungen, so handelt es sich um Einkommen aus selbstständigem Erwerb. Als Ertrag ist der Wert zum Zeitpunkt des Zuflusses umgerechnet in Schweizer Franken zu erfassen.
  • Das Schürfen (Mining) von Kryptowährungen durch Zurverfügungstellen von Rechnerleistung gegen Entschädigung führt zu steuerbarem Einkommen. Gleiches gilt auch für vereinnahmte Transaktionsgebühren. Je nach den konkreten Rahmenbedingungen (z. B. Tätigkeit im Rahmen eines Arbeitsverhältnisses oder auf eigene Rechnung) handelt es sich um selbstständigen oder unselbstständigen Erwerb.

Handelt es sich um gewerbsmässigen Handel mit Kryptowährungen, so sind die Gewinne steuerbar und die Verluste steuerlich abzugsfähig.

English:

Cryptocurrencies

Cryptocurrencies are digital means of payment or assets that must be declared in the tax return in the same way as other assets.

Cryptocurrencies held as private assets must be listed under ‘Other assets’ in the ‘List of securities and assets’:

  • Assets: Cryptocurrencies are subject to wealth tax at the year-end rate together with other assets (bank balances, securities, vehicles, real estate). For the most common cryptocurrencies, the Federal Tax Administration (FTA) has been calculating an ‘official’ market value as an average of various trading platforms for several years. If the FTA has not determined an ‘official’ market value due to a lack of regular representative trading, the cryptocurrency must be entered at the year-end price of the trading platform on which the purchase and sale transactions are executed.

  • Income: Capital gains on movable private assets, which also include cryptocurrencies, are generally tax-free. Accordingly, losses on cryptocurrencies cannot be deducted for tax purposes.

Cryptocurrencies are subject to income tax for the following reasons, among others:

  • If an employee receives salary payments or fringe benefits in the form of cryptocurrencies or tokens, this is taxable earned income and must be shown on the salary statement. The amount to be stated is the value converted into Swiss francs at the time of receipt.

  • If someone generates income by making their cryptocurrencies available (e.g. staking, validator, nominator, etc.), the income generated is deemed to be taxable investment income. This income must be declared per currency in the securities register. The relevant values on the date of the legal claim are cumulative for the relevant tax period.

  • If a self-employed person receives cryptocurrencies as payment for goods or services provided, this constitutes income from self-employment. The value converted into Swiss francs at the time of receipt must be recognised as income.

  • The mining of cryptocurrencies by providing computing power in return for compensation results in taxable income. The same applies to transaction fees received. Depending on the specific framework conditions (e.g. activity as part of an employment relationship or on one’s own account), this is either self-employment or employment.

In the case of commercial trading in cryptocurrencies, profits are taxable and losses are tax-deductible.

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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