Switzerland’s canton of Zug, home to hedge funds, crypto firms and commodity traders, will start allowing citizens to pay taxes in Bitcoin and Ether as the acceptance of digital currencies continues to rise.
“Tax settlement by means of crypto currency will be available to both companies and private individuals up to an amount of 100,000 Swiss francs ($109,670),” the canton said in a statement on Thursday. The region of about 127,000 people is collaborating with Zug-based broker Bitcoin Suisse AG, which converts the digital currency into francs and transfers the amount to the state.
Zug, which is known for its low corporate taxes, has been accepting Bitcoin payments for certain government services since 2016 and inspired the ski resort of Zermatt to do the same.
Crypto firms have gained traction in Switzerland thanks to its favorable regulation and positive attitude toward digital currencies. However, the country’s major banks, along with their global peers, have so far largely stayed away from offering blockchain-based services to clients as high volatility and security concerns outweighed recent trading booms.
Now, with Bitcoin rallying during the pandemic and experts saying it could even act as an inflation hedge, the industry’s bellwethers might change their minds again, according to Bitcoin Suisse founder and Chairman Niklas Nikolajsen.
“Everybody cares about a $0.5 trillion-market,” Nikolajsen said in an interview in Zug. “There’s almost nothing controversial about trading Bitcoin anymore. It’s completely mainstream.”
Bitcoin Suisse’s revenues were 20.9 million francs last year with a profit of 2.4 million francs, mainly from services around crypto trading. While the firm also offers its services to banks with clients who want to trade digital currencies, Bitcoin Suisse recently applied for Swiss and European banking licenses.
With a European license, Bitcoin Suisse would be able to actively target clients on the continent, where its main focus would be Germany. “Our primary client base is Switzerland, Germany and Scandinavia. But we have so much more to do in Germany and it can’t be that we have more Swiss clients when there are ten times as many Germans,” Nikolajsen said.
The 44-year-old expat from Denmark says he started buying Bitcoin when it was worth less than $1.