Declaring cryptocurrencies correctly: wallets, staking, DeFi and tax values explained clearly

Basics

In Switzerland, cryptocurrencies must be declared as wealth at market value as of 31 December. For widely used coins, the tax value of the Swiss Federal Tax Administration (ESTV) from ICTax applies; price gains on private assets generally remain tax-free. For individuals holding pure payment tokens as private assets, the following applies in principle: holdings at the end of the tax period must be declared at market value, merely holding them generally does not generate taxable income, and gains from buying and selling are in principle tax-free capital gains, while losses are not deductible.

However, as soon as the activity no longer counts as private asset management but as self-employment, the tax treatment changes significantly.^1,3

For companies and other situations involving business assets, the logic is stricter. For individuals, the direct federal tax is an income tax; for legal entities, it is a profit tax.

At the same time, the ESTV emphasizes the authoritativeness principle in its crypto working paper: taxable profit is determined on the basis of the income statement prepared in accordance with commercial law, and expenses that have not been booked cannot be claimed for tax purposes.^1,4

In practice, this means you first have to establish clearly whether you hold crypto as a private individual, whether your activity is already self-employed or professional, or whether the positions are held in a sole proprietorship, GmbH or AG. Without this classification, most declaration mistakes arise right at the start.¹

Documenting wallets

The tax authorities do not just want to see a total value but traceable proof of your holdings. For cryptocurrencies, the Zurich practice note requires a printout of the digital wallet as of the end of the tax period. This traceability is also decisive in practice outside Zurich, even if the cantonal input form looks different.³

Your wallets are only properly documented once you record, for every relevant position, the holdings as of 31 December, the name of the coin or token, the wallet or exchange used, the transaction history and how the CHF value was derived, all in a traceable way.

With self-custody, it is therefore not enough to estimate just a total amount. Conversely, with exchange accounts, a balance without reference to the transactions is often not enough either.

Separating private and business wallets is particularly important. Once private use, business activity and different platforms are mixed, it becomes almost impossible later to derive properly which holdings belong to private assets, which income has already been realized and which transactions were merely reallocations.

Determining tax values

For the most widely used cryptocurrencies, the ESTV publishes tax values in the ICTax price list. These are usually the closing prices of the last trading day in December. If prices are missing, the last available prices are used; these count as the tax value on 31 December. For cryptocurrencies without a published ESTV tax value, the ESTV accepts the market value on a leading trading platform.^1,2

In practical terms, this means that for your tax return you do not need just any average value for the year, but the correct year-end value for proving your wealth. Income received during the year must be kept separate from this.

For staking, airdrops or DeFi rewards in particular, the year-end price is not what counts, but the value in Swiss francs at the time of receipt.^1,2

A typical mistake is to use the same year-end price both for declaring wealth and for ongoing income. This is unsound for tax purposes because wealth and income have different reference points. For wealth, the position at year-end counts; for ongoing crypto income, the time of receipt.^1,2

Staking and DeFi

For staking, ESTV practice is comparatively clear. If tokens are made available to a staking pool, the compensation paid generally qualifies as income from movable assets. The value at the time of receipt, converted into Swiss francs, must be declared.

If you do not stake through a pool but act as a validator yourself, you must also examine whether this constitutes self-employment.¹

Airdrops are not tax-free simply because there is no classic payout in fiat currency either. The ESTV treats airdrops as taxable income from movable assets at their market value at the time of allocation.¹

You should be particularly careful with DeFi. The ESTV states explicitly that tax practice must continue to evolve for new situations. For DeFi protocols, there is therefore no reliable blanket formula along the lines of “everything tax-free” or “everything income.”

What matters is the economic function of each individual transaction: Is it merely a reallocation of assets, does it generate ongoing income, is a new token allocated, or do you acquire a fixed legal claim to a benefit? This is exactly where the tax treatment of DeFi transactions depends on the individual case.¹

For your declaration, this means: do not wait until year-end with DeFi. Record swaps, lending transactions, entries into and exits from liquidity pools, rewards, fees and any token allocations on an ongoing basis. The more complex the protocol, the more important it is to have documentation that makes the receipt, the consideration and the CHF value of each step plausible.¹