The Bitcoin (BTC) network uses the Proof of Work consensus algorithm. This requires a lot of computing power from the so-called miners, who verify the Bitcoin Evolution blocks with special mining hardware. The picture shows a Bitcoin coin mechanism on a circuit board.
The Swiss canton of Zug, which has the highest concentration of hedge funds, cryptocurrency companies and commodity traders, announced that it will accept Bitcoin and Ethereum for tax payments from February 2021.
In a statement by Bitcoin Suisse company on Thursday, citizens within its jurisdiction will be able to pay both their individual and corporate taxes of 100,000 Swiss francs ($ 109,670) in digital currencies.
The canton works with the brokerage company for digital currencies, Bitcoin Suisse AG, which receives the tax payments in BTC and ETH and converts the amount into Swiss francs before it is passed on to the state.
From 2021, taxes in the canton of Zug can be paid using the crypto currencies Bitcoin and Ether. This is made possible thanks to the collaboration with Bitcoin Suisse, a pioneer in the Swiss Crypto Valley. This makes Zug the first Swiss canton in which taxes can be paid with crypto currencies.
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Bitcoin adoption by Switzerland
With a population of around 127,000, Zug is known for its low corporate taxes and has been using Bitcoin payments for various government services since 2016. A large number of crypto firms are based in this region known as the home of the Crypto Valley.
According to the Zug finance director Heinz Tannler, the region is committed to promoting and simplifying the use of crypto currencies in everyday life. Enabling tax payments with Bitcoin and Ether is a step in the right direction to achieve this goal.
With this step, the canton of Zug is once again confirming its pioneering role in the field of blockchain technology, as it is the first Swiss canton to offer the possibility of paying taxes with crypto currencies.
The pilot program to try out the new system is slated to begin before the next tax season, which will begin in February 2021, with Tannler further stating that the system is not subject to the volatility of crypto exchanges.
With this new payment method, we do not take any risks, as we always receive the amount in Swiss francs, even if the payment is made in Bitcoin or Ether. Thus, the volatility of the crypto exchange rates does not affect the final payment in Swiss francs.
Switzerland has a generally favorable set of rules for Bitcoin and Co., which has attracted and promoted many crypto startups. The global coronavirus pandemic has particularly fueled both individual and institutional crypto and bitcoin adoption as more and more people have begun to view BTC as a hedge against inflation. Other smaller regions in Switzerland that accept tax payments in Bitcoin are Zermatt in January 2020 and the city of Chiasso in 2018.
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