SFTA publishes further rates for crypto currencies

Bitcoin & Co., Net Wealth Tax, Exchange Rates

Since 31th December 2015, the Swiss Federal Tax Authorities ("SFTA") publish an "official" exchange rate for Bitcoin. This exchange rate is a recommendation to the cantonal tax authorities for net wealth tax purposes.

For 2017 year end, the SFTA has added the following additional cryptocurrencies to their exchange list  (in CHF):

  • Bitcoin (BTC): 13'784.38
  • Ethereum (ETH): 721.52
  • Ripple (RXP): 1.99
  • Bitcoin Cash (BCH): 2'343.59
  • Litecoin (LTC): 222.34
  • Cardano (ADA): 0.71
  • NEM (XEM): 1.00
  • Stellar (XLM): 0.35
  • IOTA (IOT): 3.42
  • TRON (TRX): 0.04

The exchange rates published are based on the average of up to twelve different stock exchanges, sometimes including Kraken and BitStamp. For some of the coins even data from Oanda and Coinmarketcap are considered, even if neither of the two is an exchange. Because of the fragmented trading and – in some cases considerable – differences on the daily exchange rate, the highest and the lowest rate were eliminated before calculating the average from the remaining sources. However, the data sources are fare from identical for all coins. The valuation of some of the listed cryptocurrencies is based on only a small number of exchanges. This selection and the number of exchanges considered seems to be random. The fact that for certain coins the exchanges selected by the SFTA are disregarded by Coinmarketcap for their listings illustrates this. Hence, in extreme cases, the rates are based on one or two exchanges (after elimination of the highest and lowest rates). Further it seems the exchanges are chosen randomly. In our opinion, there is room for improvement in the mechanism applied, considering the impact those rates have for the tax payer.

Most of the cantons follow the recommendation of the SFTA for assessing net wealth tax. This has the benefit that tax payers are treated equally. Nevertheless, because of the casual selection and limited number of data sources, the results have a flavour of arbitrariness. Moreover, the tax authorities seem to be unaware of the fact that various exchanges have trading limits or limits for transfers back into FIAT. Therefore, gains can only be realized over a longer period which contradicts the fixing of a fair market value based on year end rates only.

We therefore recommend to all tax payers to be careful with the declaration of coins and not to adopt the rates of the SFTA without considering alternatives.

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