Accounting and taxation of crypto for companies

A company that holds, receives or moves crypto-assets has to answer some very concrete questions: how are they recognised in the balance sheet? At what value? How are the gains taxed? Does VAT apply? These are matters of ordinary accounting and taxation applied to a new asset, and they must be set up properly from the very first financial year, because correcting them after the fact is complicated and costly. Let’s look at the points that matter for a Swiss company.

Crypto is an element of assets

From an accounting perspective, the crypto-assets held by a company are, to all intents and purposes, an element of the company’s assets that must be recognised in the balance sheet in accordance with the Code of Obligations. There is no off-balance-sheet “crypto account”: if the company owns them, they appear under assets. The classification depends on their function:

Current assets if they are intended for sale or current use (for example, tokens received as payment or held for trading).
Fixed assets if they are held over the long term as an investment.

Valuation in the balance sheet

Here the prudence principle of Swiss accounting law comes into play. For positions not intended for trading, the rule is generally the lower of acquisition cost or market value: they are recognised at cost and written down if the market value falls below it, but as a rule they are not revalued above cost. For assets with an observable market price, the law permits, in certain cases, valuation at the closing-day rate, with an effect on the result: a choice that must be made deliberately, because the volatility of crypto is directly reflected in the profit. In any case, it is necessary to document the source of the price and to apply the criterion consistently over time.

Recurring operations

Some typical situations must be handled with clear criteria:

Receipts in crypto. Revenue paid in tokens is recognised at the CHF equivalent at the time of the transaction. The subsequent change in value is a gain or loss separate from the sale of the good or service.
Conversions. Every crypto/fiat or crypto/crypto conversion can generate realised gains or losses, to be recognised.
Payments in tokens. Paying suppliers or collaborators in crypto has accounting effects and, for employees, implications for salary and social insurance.

Taxation of the company

On the tax side, the ordinary principles apply:

Profit tax. Gains on crypto-assets — whether realised on sale or recognised through valuation at the market rate — are included in the company’s taxable profit, like any other income. Losses are deductible under the ordinary rules.
Capital tax. Crypto on the balance sheet forms part of the taxable equity.
Authoritative-balance-sheet principle. The commercial balance sheet is the basis of taxation: the accounting valuation choices have a direct effect on taxes.

And VAT?

The VAT treatment depends on the nature of the transaction. The transfer of pure means of payment tends to be excluded from the scope of the tax, whereas a utility token that gives access to a good or service follows the treatment of that good or service. The general parameters remain valid: the registration threshold of CHF 100,000 in turnover and the standard rate of 8.1% where the transaction is taxable. The qualification of the token, once again, determines the treatment.

Why set it up straight away

Above CHF 500,000 in turnover the obligation to keep full accounts kicks in, but the issue concerns every company that deals in crypto, regardless of size: an auditor, a bank or the tax authority will require a consistent and traceable framework. Improvising the accounting for crypto leads to adjustments, disputes and inconsistent valuations from one financial year to the next. Setting up valuation criteria, price documentation and the treatment of conversions from the outset avoids most of the problems.

This content is informative and does not constitute tax or accounting advice. Practice and assessments evolve: every situation must be verified in the specific case.

Do you want your company to handle crypto in the balance sheet with solid, audit-proof criteria? Let’s set up the accounting and taxation of your crypto-assets together. Let’s talk about it.