1. accounting challenges
The introductory lecture dealt in particular with the accounting aspects of crypto-currencies. If companies hold cryptocurrencies in digital "wallets", their posting is associated with particular difficulties. Accounting programs are currently not yet able to display transactions in crypto-currencies.01 The principle of "no posting without voucher" is also being put to the test. Although all transactions of a block chain are publicly accessible online, the evaluation of such a transaction list requires a high level of IT affinity.
2. initial coin offerings (ICO's) and the design of tokens
The so-called "Initial Coin Offerings", or ICOs for short (based on the Initital Public Offering, IPO) also gave rise to discussions. The ICO is a method of raising capital based on block chain technology. During an ICO, tokens are issued against crypto currencies. The tax treatment of a token depends on its specific design and function.02 The function of a token is described in the white paper. The function of a token should therefore be defined at the beginning.
Currency tokens such as Bitcoins only fulfil a currency function. By purchasing a utility token, on the other hand, a service is acquired. They often serve as the access key to a particular network or service. Equity or security tokens represent shares in a company, which is why capital market regulations must be observed when issuing such tokens.
In some cases, ICOs are also structured as donations (contributions) to charitable foundations. In Switzerland, however, this construct has come under pressure.
3rd interview with Mr Matthias Langer
In the following interview, Mr. Matthias Langer discusses some selected points of the ISIS Tax Talks.
The transactions of a block chain are publicly accessible. Why is it nevertheless so difficult to use this information as evidence for accounting purposes?
The payee is not indicated as a person, as in the case of a bank transfer, but the addresses are an alphanumeric combination of numbers that cannot be assigned to a person without further effort. In addition, in Bitcoin transactions, for example, the entire balance is "transferred" and any remaining balance is returned to a new address. Presenting this sequence poses additional challenges for both the programs and the accountant.
If a company holds crypto-currencies and thus so-called wallets: How can an accountant check that the information he has on the company's wallets is complete?
First of all, the challenge for the accountant is to determine the completeness regarding the number of wallets. On the one hand, this can be done by tracing the transaction history between FIAT and crypto payments, in that a wallet is created by a transfer or switch from FIAT to crypto. On the other hand, in the case of incoming payments which are made to a new Wallet, the Wallet's affiliation with the Company can only be indicated by a note. For an outsider, such as the auditor, this connection may be missing, which results in queries. Possible solutions include the use of cryptographic signatures and the execution of a Satoshi transaction.
Why has the construction of an ICO in the sense of a donation (contribution) come under pressure in Switzerland?
According to our experience, only very few block chain or cryptobased projects are purely charitable projects. On the contrary, you can read in most white papers that the initiators of the respective project team have earmarked between 10-20% of the issued tokens for themselves to compensate for their advance work. In the case of a charitable foundation, the question arises on what legal basis such a payment should be made to the initiators. A distribution from the foundation is regularly excluded in the case of a charitable foundation and disproportionate service remunerations are also not accepted by the foundation prospectus. As a German tax consultant, I would also like to point out that, for example, if a gift is made by a natural person who is tax resident in Germany, German gift tax would also be applicable. This means that a gift above the legal allowance results in a gift tax of 30% to 50%. Both the donor and the donee are jointly and severally liable for the payment of the gift tax. Furthermore, the foundation board, for example, commits tax evasion in Germany if it does not report such a gift in Germany within the prescribed period. In the case of a contribution in crypto, the foundation board also faces the practical problem that it often has no idea who the donor is and from which tax domicile the donor comes.
