Swiss Federal Council States Tax Law Stays Unchanged For Blockchain And DLT

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The Swiss Tax law will officially remain unchanged, as the Federal Council of Switzerland has formally concluded that Blockchains and distributed ledger technology (DLT) will have no repercussions on it. In today’s meeting, the Federal council took official note of a report that commented on the need for the country to amend its tax laws, in light of blockchain technology. According to the report, however, the country has no obligation to enact special legislative amendments to the tax law.

No Need To Change Current Laws

When it comes to the profits, income, capital gains, and wealth taxes, the existing legislation has already proved itself capable of handling the matter. Furthermore, existing laws regarding VAT covers the arrangements based on blockchain and DLT, as well. Thus, it was concluded that no special tax provisions needed to be done in order to facilitate the taxation of these new instruments.

Another critical area that was scrutinized was the collection of withholding tax, done on income gained from participation tokens and equity. The report recommended that withholding tax coverage should not be expanded upon, citing the various effects for Switzerland as a business location and beyond. As for the transfer stamp tax, the report advised once more against amendments to the legislation already present. This is due to the current uncertainty that pertains to the type and scope of the DLT trading facility’s future usage as a whole.

An Investigation Regarding Legality

The report in question, addressing whether or not Switzerland needs to adapt its tax law to the new developments of DLT and blockchain, was prepared by the Federal Department of Finance. This report was done by order of the Federal Council itself.

Swiss Legislation Already Capable

Switzerland stood as a very friendly harbor for projects that leveraged the abilities of blockchain-based technologies. A prime example of this would be back in November of 2019. The Federal council announced the adoption of the dispatch regarding further improvements of the DLT/blockchain framework conditions. The proposal itself aimed to create higher levels of legal certainty, as well as removing the various warriors that were placed on applications based on DLT, all the while trying to reduce the risks of abuse.

It was back in December of 2018 when the Federal Council published a report regarding the blockchain and DLT legal framework in regards to the finance sector.  The report showed that the legal framework that Switzerland has in place is already quite capable of dealing with new technologies, DLT included.

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