Crypto License in Switzerland

To register a cryptocurrency company in Switzerland, you need to submit a list of documents, which depends on the type of company you want to register.

As a rule, the list of documents includes:

• application for company registration;
• articles of Association of the company;
• the memorandum of association of the company;
• documents confirming the identity of the founders, shareholders, and directors of the company;
• a certificate of absence of criminal record of the founders and management of the company (the original must not be older than six months);
• copies of documents confirming the education and work experience of the owners and directors;
• documents confirming the company’s address;
• AML policy with relevant software;
• documents confirming payment of the authorized capital of the company;
• confirmation of opening a corporate bank account and other related banking documents;
• Stampa declaration (confirming that there are no other physical deposits and no recovery of assets other than those specified in the Articles of Association).

This is only a general list of documents and specific requirements may vary depending on the region, type of company, and activities. To avoid misunderstandings and mistakes, it is recommended to work with Gofaizen & Sherle legal experts specializing in company registration and licensing in Switzerland.

The very process of founding a crypto company in Switzerland includes the following steps:

• Checking the uniqueness of the company name in the Central Index of Company Names.
• Registering the company name through the EasyGov platform, which will automatically enter it into the Swiss company registry and assign a unique company identification number (UID).
• Opening a Swiss bank account and paying the required minimum authorized capital.
• Preparing the application for company registration.
• If the company’s turnover exceeds CHF 100,000 (approximately USD 113,054), it must be registered with the Commercial Register.
• Registration of the company with the Federal Tax Administration and cantonal tax authorities.
• Employee registration with the Federal Social Insurance Office (FSIO) and the Cantonal Compensation Office.
• Applying for a crypto license provided by FINMA.

Once the application for company formation has been processed, the Commercial Registry will publish the company’s details in the Swiss Commercial Registry.

It is important to keep in mind that administrative requirements and regulations depend on the nature of each company’s crypto activities. It is therefore advisable to clearly define the scope of crypto operations before the company formation process begins.

Switzerland is characterized by a friendly and open attitude towards cryptocurrencies and blockchain technology. The country does not have a separate, specific law on cryptocurrencies, and an existing legal framework is used to regulate various aspects of the cryptocurrency industry.

The key piece of legislation in Switzerland that defines the framework for cryptocurrency transactions in the country is the DLT Act. This law regulates:

• licensing of cryptocurrency activities;
• regulations for trading;
• anti-money laundering measures.

Also, the DLT Act establishes the financial infrastructure for cryptocurrency trading and procedures in case of bankruptcy.

The DLT Act defines the Swiss National Bank as the guarantor of the sustainability of the financial market infrastructure. According to the Financial Market Infrastructure Act, this body is tasked with supervising financial market entities, including:

• DLT trading floors;
• central securities depositories;
• payment systems.

At the request of the Swiss National Bank, each regulated company is required to provide all necessary information and documentation to identify risks that could undermine the stability of the financial market system.

Under the Anti-Money Laundering Act (AMLA), cryptocurrency exchange operators, brokers, and custodians are subject to regulation as financial intermediaries. Their activities require registration with FINMA and strict adherence to comprehensive due diligence and reporting obligations.

Cryptocurrency projects that issue tokens through initial coin offerings (ICOs) or initial token offerings (ITOs) are subject to different regulatory rules that depend on the characteristics and functionality of those tokens. FINMA classifies tokens into three categories:

• payment;
• utility tokens;
• asset tokens.

Each of these categories has different legal implications in terms of securities law, civil law, and tax regulations. It should be noted that even if payment tokens are not recognized as legal tender, FINMA does not classify them as securities, as their primary purpose is to be used as a means of payment.

Determining the tax treatment of cryptocurrency companies depends on the nature and purpose of their economic activity. Generally, cryptocurrencies are not treated as ordinary money, but as assets. As a result, most cryptocurrencies are subject to asset tax laws.

An additional important factor is tax residency status. Individuals with tax residency are required to pay taxes on income earned anywhere in the world. Non-resident companies are only liable to pay taxes on income earned in Switzerland.

The tax system in Switzerland has a tiered structure, as tax administration functions are divided between the FTA, cantons, and municipalities. Federal tax rates generally remain stable, while cantonal tax rates are set annually and published on the official websites of each canton. Although taxation systems may vary from location to location, the tax year usually coincides with the reporting fiscal year.

Most cryptocurrency license holders are required to pay the following taxes at the federal, cantonal, and municipal levels:

• withholding tax – 35%;
• corporate income tax – 11.9% to 21%;
• value added tax – 7.7%;
• social security contributions – from 0.5% to 5.3%;
• stamp duty – the rate is 1%;
• capital gains tax – from 0.001% to 0.5%.

Corporate income tax (CIT) is levied at all three levels. The federal CIT rate is 8.5% of profits after tax deductions. As different cantons and municipalities have different taxation systems, the cantonal and municipal CIT rates can differ significantly.

Capital Gains Tax (CGT) is levied at the cantonal level only on certain income derived from certain cryptocurrency activities. It is important to note that:

• Capital raised for an initial coin offering (ICO) is not considered income for the issuer.
• The issuance of new tokens does not involve the transfer for tax purposes of capital gains.
• If the transfer of payment tokens is not considered a trading transaction, they may be treated as securities.

Transactions such as the exchange and use of payment tokens are exempt from VAT. This is because this category of cryptocurrencies is recognized as a means of payment and is therefore considered similar to traditional currency. All commissions and fees associated with such transactions are considered financial service fees and are not subject to VAT.

Switzerland has approximately 100 international double taxation treaties, which allow taxpayers to protect their income earned abroad from double taxation. In addition, if certain conditions are met, companies with foreign business are entitled to tax exemptions at cantonal and municipal levels and are taxed at rates ranging from 7.83% to 11% on foreign-sourced profits.