What is the difference between Bitcoin as a means of payment and Bitcoin as a speculative object from a tax perspective? And how is it classified as a payment instrument in the various jurisdictions of the DACH region?
The report will explain tax impacts using Bitcoin as an example. Bitcoin is classified as a payment token according to the Swiss Federal Tax Administration (FTA) and the European Court of Justice.30 Despite the fact that a coin or token has already been qualified by the Liechtenstein or Swiss Financial Market Authority, the classification may deviate from the FTA’s criteria for tax purposes.
Therefore, it is important to bear in mind that when considering or examining a token from a tax perspective and evaluating the tax impacts in Liechtenstein or Switzerland, FTA’s classification criteria must always be taken into account. Also, the German Federal Financial Supervisory Authority (BaFin) has classified cryptocurrencies as billing units in accordance with Section 1 (11) of the German Banking Act (Kreditwesengesetz — KWG).31
This means that they are not considered to be legal tender and are, therefore, classified as private money for German tax purposes.32 Austria takes the same perspective and does not accept Bitcoin as a legal tender or financial instrument but as a virtual means of payment.33
The FTA is necessary for Liechtenstein’s value-added tax (VAT) assessment, since the Principality of Liechtenstein and the Swiss Confederation concluded the Customs Treaty on the annexation of the Principality of Liechtenstein to the Swiss customs territory on The FTA is necessary for Liechtenstein’s value-added tax (VAT) assessment, since the Principality of Liechtenstein and the Swiss Confederation concluded the Customs Treaty on the annexation of the Principality of Liechtenstein to the Swiss customs territory on October 28, 1994. For this reason, the substantive Swiss provisions on VAT are relevant and have been incorporated into Liechtenstein law.
Payment coins or token within the meaning of the FTA may be used exclusively as means of payment for the purchase of supplies and/or services from one or more service providers. They, therefore, do not entitle the holder to receive specific or determinable services but merely represent the agreed means of payment. As Bitcoin is used as a means of payment and does not entitle the owner to receive specific services, it is classified as a payment token.
Before evaluating a crypto asset and a case, the type of asset always has to be clarified, because it determines the proper sections of the law. This means that the following assessment cannot be easily transferred to another crypto asset. If assets fall under the classification of a utility or security token, this would lead to different tax assessments. For further information on the taxation of specific crypto assets, contact actus ag.
After this article we will take a closer look at the individual jurisdictions in the DACH region, as promised last week. For this purpose, we will start next week with a detailed analysis of the currently applicable tax law in Liechtenstein with regard to cryptocurrencies.
30 Swiss Federal Tax Administration (EStV), 2019, Working Paper Kryptowährungen, July 2020. Retrieved from https://www.estv.admin.ch/estv/de/home/direkte-bundessteuer/direkte-bundessteuer/fachinformationen/kryptowaehrungen.html; Reichlin Hess Rechtsanwälte, 2019, Besteuerung von Kryptowährungen und anderen Token: Eidgenössische Steuerverwaltung publiziert Arbeitspapier, July 2020, Retrieved from https://www.reichlinhess.ch/2019/10/04/besteuerung-kryptowaehrungen-token-schweiz-arbeitspapier-eidgenoessische-steuerverwaltung/; European Court of Justice preliminary ruling case C-264/14 from October 22, 2015.
31 BaFin, Merkblatt: Zweites Hinweisschreiben zu Prospekt- und Erlaubnispflichten im Zusammenhang mit der Ausgabe sogenannter Krypto-Token; BaFin, Kryptotoken: Beitrag aus dem Jahresbericht 2019 der BaFin,July 2020. Retrieved from https://www.bafin.de/DE/PublikationenDaten/Jahresbericht/Jahresbericht2017/Kapitel2/Kapitel2_7/Kapitel2_7_3/kapitel2_7_3_node.html.
32 Zitzmann, F., 2017, Steuerliche Behandlung der Kryptowährungen, July 21, 2020. Retrieved from
https://www.haufe.de/compliance/management-praxis/steuerliche-behandlung-der-kryptowaehrungen_230130_431018.html.
33 Austrian Federal Ministry of Finance (BMF), Steuerliche Behandlung von Krypto-Assets, July 21, 2020. Retrieved from
https://www.bmf.gv.at/themen/steuern/sparen-veranlagen/Steuerliche-Behandlung-von-Krypto-Assets.html.
This article is an extract from the 70+ page Discovering Institutional Demand for Digital Assets research report co-published by the Crypto Research Report and Cointelegraph Consulting, written by eight authors and supported by SIX Digital Exchange, BlockFi, Bitmain, Blocksize Capital, and Nexo.
