Key takeaways:
- Switzerland’s authority has invited public comment on embracing international standards to “ensure equal treatment” for crypto tax reporting as regular assets.
- Switzerland’s current schedule for accession to the AEOI is January 1, 2026.
In an effort to “ensure equal treatment” for crypto tax reporting as regular assets, Switzerland’s top authority has invited public comment on its intentions to embrace international standards.
The Federal Council, a seven-member body that leads the Swiss government, will implement the Crypto-Asset Reporting Framework (CARF) to increase tax transparency.
The Federal Council released a consultation document on May 15 to find out how the public feels about participating in the Automatic Exchange of Information (AEOI), a collaboration between international tax administrations to combat tax evasion. Switzerland’s current schedule for accession to the AEOI is January 1, 2026.
AEOI and other efforts were started by the Organisation for Economic Co-operation and Development (OECD) for the Group of 20 (G20) countries; later, other countries were added.
The Common Reporting Standard (CRS) of the OECD was previously adopted by Switzerland in 2014; however, it did not include CARF, which governs the management of crypto assets and their providers. With plans to alter such a situation, the Federal Council stated:
“Implementation of the CARF will expand Switzerland’s progressive crypto market regulation and help to maintain the credibility and reputation of the Swiss financial center.”
It is not possible to rely merely on the replies to the consultation paper to implement CARF; instead, parliamentary approval is required.
The CARF standards are anticipated to be completely embraced by approximately 50 nations by 2027, enabling them to collaborate in the fight against money laundering.
In addition to ensuring “equal treatment” for traditional assets and financial institutions, the Swiss federal authority aims to remedy shortcomings in the tax transparency process. After more than three months, the consultation will conclude on September 6.
Canada’s annual budget for April 2024 proposed that the nation also adopt the CARF for taxes by 2026. Crypto asset service providers (CASPs), including crypto exchanges, brokers, dealers, and automated teller machines (ATMs) operators, would be subject to additional reporting obligations under the CARF.
Transactions involving crypto assets and fiat as well as crypto assets for other crypto assets, must be reported to the Canada Revenue Agency (CRA) by Canadian individuals and corporations once the rule takes effect.
