Switzerland’s existing tax law is applicable to developments in the blockchain industry, the Swiss Federal Council said.

According to the federal authority, Switzerland does not need to amend its existing tax legislation in regard to blockchain and distributed ledger technology.

No legislative action is necessary regarding the blockchain industry

In a June 19 meeting, the Federal Council addressed a report on the need to amend Switzerland’s tax law in response to DLT and blockchain developments. According to the official statement, the existing legislation including income, profit, wealth, capital gains taxes, as well as VAT, “has proved its worth” regarding arrangements based on DLT and blockchain.

“Therefore, no legislative action is necessary as regards special tax provisions for the new instruments,” the Federal Council wrote. Additionally, the authority recommended that withholding tax coverage should not be expanded in terms of income from equity and participation tokens.

The Council’s report has been compiled with support of Swiss Federal Tax Administration (FTA). A spokesperson at the FTA confirmed to Cointelegraph that the authority provided some clarifications for the decision voiced by the Federal Council. In August 2019, the FTA published a working paper regarding the treatment of cryptocurrencies and ITOs with regard to wealth, income and profit tax as well as withholding tax.

The Swiss Federal Council has been paying a lot of attention to blockchain

The Federal Council’s latest decision follows the authority’s initial call to evaluate the need for blockchain-related amendments to Swiss tax law back in 2018. In December 2018, the authority said Switzerland's legal framework was well suited to dealing with new technologies such as blockchain.

The Federal Council of Switzerland — the country’s executive governing body — has been paying a lot of attention to blockchain development, initiating multiple measures to increase legal certainty around blockchain use in the country. In March 2019, the Federal Council launched a consultation on the adaptation of federal law for blockchain development. In November 2019, the Council called for a better regulatory framework for blockchain.

Switzerland has emerged as one of the most crypto-friendly countries and is often referred to as a “crypto nation.” As reported by Cointelegraph, major crypto-related practices such as trading and mining are subject to federal taxes in Switzerland. As such, individuals paid in crypto need to declare their assets for income tax purposes.