The canton of Zug in Switzerland will start accepting tax payments in Bitcoin or Ethereum. It will do so with the support of the Bitcoin Suisse bank. The bank will actually convert BTC and ETH required to pay taxes on cryptocurrencies, into Swiss francs.
The official website of the canton of Zug explains how the tax payment will work, which seems to be very simple: just scan a QR code and send the required amount from your wallet. At the moment there is a cap on payments up to 100,000 Swiss francs.
This procedure is not new to Switzerland. As The Block Crypto reports, Zermatt and Chiasso already accept tax payments in cryptocurrencies.
As explained, both natural and legal persons can pay taxes using cryptocurrencies. Income and wealth taxes of natural persons and income and capital taxes of legal persons can be paid this way. The official website explains that income withholding, inheritance and gift taxes can also be paid in Bitcoin or Ethereum.
The payment has a 1% fee charged in CHF which serves to offset the cost of the exchange rate between BTC and ETH and Swiss francs. The involvement of Bitcoin Suisse AG will allow the canton of Zug to keep itself protected from the volatility of cryptocurrencies. In practice, the bank will bear the risk of volatility and exchange rates to fiat currency, while the canton of Zug will receive exactly the fees invoiced in Swiss francs.
Zug and taxes in cryptocurrencies: Switzerland confirms its status of crypto-valley
This measure concerning the canton of Zug confirms that Switzerland is a real hub where cryptocurrencies are accepted and encouraged. This at a time when Bitcoin and crypto are at their most popular, thanks to price increases that are driving the sector to new all-time highs every day.
Regarding the decision to use cryptocurrencies to pay taxes, in September, when the announcement was made, CFO Heinz Tännler had explained:
“As the home of the Crypto Valley, it is important to us to further promote and simplify the use of cryptocurrencies in everyday life. By enabling the payment of taxes with Bitcoin or Ether, we are taking a big step in this direction”.