A recent ruling by tax authorities in Switzerland has clarified how Security Token Offerings (STOs) will be treated in terms of taxation. Blockstate’s recent STO was ruled to be free from both profit tax and value added tax (VAT), and subject only to security tax—the same treatment as a standard capital raise.
Taxes for Security
Tokens in Switzerland Explained
Switzerland has a reputation of facilitating a regulatory friendly jurisdiction for digital assets.
In fact, Security Token
Offerings (STOs) in Switzerland have a higher
success rate than any other European country.
Still, the nascent security token industry is known to lack
in certain aspects of clear regulatory guidance around the globe— even in
Thanks to the
recent STO conducted by Blockstate— which featured tokenized equity— clearer
guidance has arrived in the jurisdiction of Switzerland.
A big question for Blockstate and Swiss authorities centered around the taxation of a security token-based capital raise. Until recently, Blockstate didn’t know if their STO would trigger profit and value added tax or whether the STO would receive the treatment of a standard capital raise, meaning only security tax would apply.
Now, Blockstate says Swiss tax authorities have verified
that its STO will not be subject to profit tax or value added tax (VAT).
According to Blockstate,
“The tax authorities largely followed in its rulings the arguments of BlockState and PST Legal and concluded that the issuance and the profit on the sale of own shares through a security token offering in this specific case does not trigger profit tax and added-value tax, but security issue tax. This is a unique tax clarification for the BlockState’s security token offering model and marks the first time that a Swiss tax authority has issued a ruling on the tax classification of an equity STO.”
In other jurisdictions across the globe, regulatory bodies have
a reputation for remaining hesitant to provide clear regulatory frameworks for
Such is the case in the United States for example, where Congress
members have petitioned the IRS to clarify its tax requirements for digital
assets. Congress has also asked
the Securities and Exchange Commission (SEC) to clarify its securities token classification.
The SEC has responded by suggesting nearly
every ICO has constituted a securities offering.
While the young industry continues to develop and receive
clarifications related to its regulatory requirements, Switzerland continues to
gain ground as an attractive jurisdiction to launch an STO.
What do you think about Blockstate’s recent
clarification concerning taxes on STOs in Switzerland? We want to know your
thoughts in the comments section below.
Image courtesy of Unsplash.