Swiss authorities devise strategy to implement worldwide cryptocurrency reporting system

The highest governing body in Switzerland has initiated a public consultation to consider the adoption of global standards for reporting cryptocurrency taxes in order to ensure fair treatment in comparison to traditional assets. The Federal Council, a group of seven members who collectively oversee the Swiss government, plans to implement the Crypto-Asset Reporting Framework (CARF) with the aim of improving tax transparency. On May 15, the Federal Council launched a consultation paper to gather public opinion on joining the Automatic Exchange of Information (AEOI), an initiative that promotes cooperation between international tax administrations to combat tax evasion. Switzerland’s participation in the AEOI is scheduled to begin on January 1, 2026. The Organisation for Economic Co-operation and Development (OECD) established the AEOI and other initiatives for the Group of 20 (G20) nations, which were later extended to include other countries. In 2014, Switzerland adopted the OECD’s Common Reporting Standard (CRS), but did not include CARF, which governs the handling of cryptocurrency assets and their providers. With the intention of changing this, the Federal Council stated, “Implementation of the CARF will expand Switzerland’s progressive regulation of the cryptocurrency market and help maintain the credibility and reputation of the Swiss financial center.” However, parliamentary approval will be required for the implementation of CARF and it cannot solely rely on the responses to the consultation paper. By 2027, it is expected that nearly 50 countries will fully adopt CARF regulations to collectively combat money laundering. The Swiss federal authority aims to “address gaps in the tax transparency mechanism and ensure equal treatment in relation to traditional assets and financial institutions.” The consultation period will last over three months and conclude on September 6. In related news, the G20 has made progress in establishing an international framework for cryptocurrencies. Additionally, Canada’s annual budget in April 2024 indicated plans to implement CARF for taxation by 2026. CARF would introduce new reporting requirements for cryptocurrency service providers, including exchanges, brokers, dealers, and automated teller machine operators. Once the regulation is in effect, individuals and businesses in Canada will be obligated to report transactions involving cryptocurrency assets and fiat currency, as well as transactions between different cryptocurrencies, to the Canada Revenue Agency.