Blockchain Project Tax Support

Generally, the proceeds from token sales are considered as revenues. However the Swiss tax and accounting laws allow to postpone the recognition of income and to offset them with future expenses. Effectively, many blockchain projects are subject to a minimum taxation of 5% on their annual expenses. 

To benefit from tax exemption, a project needs to have a charitable purpose. Even the blockchain projects that are structured as foundations typically do not meet this requirement and must file an annual income tax return. In addition, most projects are subject to Swiss VAT.  

The most urgent tax to deal with is typically the VAT, since you might have to register for VAT in the first year of operation and file a VAT return in after the first quarter. Depending on the income of the project, it might not be possible to retroactively register your company for VAT for a past calendar year, leading to non-recoverable VAT. The corporate income tax deadlines are much more generous since a company does not always have to file an income tax return in the first calendar year of operations. For example, an association incorporated in Zug in July 2022, will have to file its first tax return 2022/2023 by 31 March 2025 at the latest. 

Unfortunately, this is not possible. The tax authorities typically take the first third-party investment as a reference price point for the valuation of founder’s tokens, which can lead to very high allocations. In certain circumstances a much lower value might be justified, but we recommend addressing this topic as early as possible to avoid negative surprises.