Cryptocurrency Taxation for Individuals in Switzerland: Voluntary Disclosure
Holding cryptocurrencies in Switzerland raises complex tax questions that many individuals have not correctly declared. In this situation, voluntary disclosure is a procedure allowing taxpayers to regularise their position without incurring criminal penalties. In Switzerland, crypto assets are treated as assets that must be declared in the annual tax return. Ignorance of these rules has led many holders to omit such declarations, creating a significant tax risk.
Mechanism of Voluntary Disclosure under Swiss Tax Law
Voluntary disclosure, also known as voluntary tax regularisation, is a mechanism provided by Swiss tax legislation allowing taxpayers to disclose to tax authorities previously undeclared income or assets, without exposure to criminal proceedings.
This mechanism is governed by art. 175 para. 3 of the Federal Act on Direct Federal Tax (FITA) and art. 56 para. 1bis of the Federal Act on the Harmonisation of Direct Cantonal and Communal Taxes (FHTA). These provisions state that a taxpayer who spontaneously discloses a tax evasion for the first time is exempt from any penalty if three cumulative conditions are met:
- The evasion was not known to any tax authority
- The taxpayer cooperates unreservedly with the administration to determine the back-tax amount
- They make efforts to pay the back-tax due
Scope and Limits of Voluntary Disclosure
- Can be used only once in the taxpayer's lifetime to obtain complete exemption from penalty
- Covers all direct taxes (income and wealth at federal, cantonal and communal level)
- Back-tax generally covers the last ten tax years
- Does not automatically extend to VAT or stamp duties (separate procedures)
Elements Covered by Cryptocurrency Voluntary Disclosure
For cryptocurrency holders, voluntary disclosure may cover:
- Undeclared cryptocurrency holdings in the wealth statement
- Mining or staking income not declared
- Capital gains realised in the course of an activity classified as professional securities trading
- Income from airdrops or forks not declared
Voluntary Disclosure Procedure for Cryptocurrency Holders
Step 1: Collecting and Reconstructing Data
Before contacting tax authorities, the taxpayer must gather all information relating to their cryptocurrency transactions:
- Complete transaction history (purchases, sales, exchanges between cryptocurrencies)
- Exchange platform statements
- Wallet addresses and their contents
- Income documentation from staking, mining or other activities
- Justification of acquisition prices and market values at each 31 December
Step 2: Historical Valuation of Crypto Assets
For each relevant tax year, you must reconstruct the CHF value of each cryptocurrency held on 31 December. For older transactions, reconstructing the history may require recourse to specialised blockchain analysis services.
Step 3: Submitting the Disclosure to Tax Authorities
The voluntary disclosure must be addressed to the tax administration of the canton of domicile. The file submitted generally includes:
- A covering letter explaining the voluntary disclosure approach
- A summary table of undeclared items by tax year
- Supporting documents for transactions and valuations
- A proposed calculation of the back-tax
Step 4: Dialogue with the Administration and Payment
Following submission of the file, the tax administration analyses it and may request additional information. The administration then determines the amount of back-tax, plus default interest (generally 3% per year), but without any tax penalty in the case of a first voluntary disclosure.
Financial Consequences of Voluntary Disclosure
While voluntary disclosure avoids tax penalties, it does not exempt the taxpayer from paying back-tax and default interest:
- Back-taxes over the last 10 tax years
- Default interest at approximately 3% per year
- Possibility of requesting instalment payment
- Potential partial liquidation of the crypto portfolio to fund the back-tax
Frequently Asked Questions about Cryptocurrency Voluntary Disclosure in Switzerland
How many tax years does a voluntary disclosure for undeclared crypto cover?
Voluntary disclosure in principle covers the last ten tax years, corresponding to the limitation period for tax evasion. Default interest (generally 3% per year) accrues over the entire period. Some cantons may apply slightly different practices regarding the period covered.
Does voluntary disclosure protect against criminal prosecution?
Yes, if it is the taxpayer's first disclosure. Art. 175 para. 3 FITA provides for complete exemption from any tax penalty. However, voluntary disclosure does not eliminate the obligation to pay the taxes due, default interest and back-taxes over 10 years.
How do I value cryptocurrencies for past tax years?
For each 31 December of the relevant years, you must reconstruct the cryptocurrency rates. Archives from the FTA (for listed cryptos), CoinGecko or CoinMarketCap allow historical rates to be retrieved. For little-known or delisted tokens, blockchain analysis and specialised archives are necessary.
Can I benefit from voluntary disclosure multiple times?
Not for complete penalty exemption. The first voluntary disclosure allows total immunity. Subsequent disclosures benefit from a reduction in the penalty to 1/5 of the amount, but no longer offer complete exemption. It is therefore crucial to be exhaustive during the first process.
Does PBM Avocats assist with voluntary disclosure procedures for crypto?
Yes. Our firm handles preliminary analysis of the situation, reconstruction of the transaction history, valuation of crypto assets, structuring of the disclosure file and dialogue with cantonal tax authorities in Geneva and Lausanne. Attorney-client privilege protects information during the preparatory phase.