Crypto license obtainment in Switzerland
Switzerland has one of the most progressive economies in the world. It is a very popular place to establish crypto-related businesses, the canton of Zug is also known as the “crypto valley” among the local population. At the same time, the regulation of crypto-currency in Switzerland is one of the most incomprehensible, but it remains among the most sought-after locations for initial coin offerings (ICOs) and security token offerings (STOs).
Incorporation: around 3 months
Minimum paid up capital: 100,000 CHF
Incorporating a Swiss company can offer many valuable benefits to its owners:
- Low tax rates – Tax liability and assessments are based on a clear inter-cantonal tax system and the use of tax rulings for special categories;
- Cantonal taxes – Tax rates vary considerably depending on the Swiss canton where the holding company is established. Resident companies must pay tax on the income received worldwide. This tax rate can vary between 4% and 25%, depending on the tax rates set by each canton.
- Tax reduction – If the holding company owns 20% of the share capital of another legal entity, it can also benefit from the reduction of the corporate tax rate at the federal level;
- Exemptions from the dividends – The double tax treaties signed by Switzerland with the European Union and several other jurisdictions, can provide tax exemptions for the dividends received by subsidiaries of the Swiss holding companies. Dividends received by the subsidiaries of the holding companies give them the right to receive a federal tax reduction by a portion of the dividend income to the total net income;
- Friendly business environment – In addition to this relatively tax-friendly environment, the benefits of owning a business in Switzerland, however modest by comparison to the country’s corporate giants, are not to be sneezed at, thanks to a uniquely stable macro economic and legal infrastructure which offer exceptionally high levels of both corporate and individual security;
Most of the activities related to cryptobusiness are regulated by the Federal Financial Markets Supervisory Authority (FINMA) through regular publication of guidelines in one or another area of cryptobusiness.
As for the ICO itself, FINMA regulates this activity, dividing produced tokens into three categories:
- payment tokens: a synonym for cryptocurrency (as a rule, fall under the license of a financial intermediary);
- utility tokens: a token designed, for example, to provide digital access to an application or service (as a rule, is not subject to licensing, but in some cases may be equated with securities);
- asset tokens: a token whose function is similar to stocks and bonds (as a rule, they fall under the license for trading activity in the field of securities).
Financial intermediary license
Under the Anti-Money Laundering Act (AMLA), financial intermediaries who are not members of a self-regulatory organization require a license from FINMA. Before a license can be issued to a directly subordinated financial intermediary (DSFI), it must meet the license conditions set out in the Act (Art. 14 AMLA).
A financial intermediary must:
- be entered in the Commercial Register as a commercial undertaking or be officially authorized to conduct business;
- be able to ensure compliance with AMLA requirements by having an appropriate organizational structure and internal regulations; and
- enjoy a good reputation and be able to provide assurance both of compliance with its duties under AMLA and of proper business conduct. These conditions apply both to the organization itself and to the individuals responsible for its administration and management.
Applications must demonstrate that future license holders will meet all the licensing requirements specified in the Act or will do so immediately after authorization has been granted.
Applications must be submitted in an official language of the Swiss Confederation and signed by the applicant. Applications filed by the applicant’s legal representative must be signed by this person; a certified copy of this person’s power of attorney must also be enclosed.
FINMA will process the application once it has been submitted correctly and in full. If necessary, the applicant may be asked to submit further information or documents in order to establish full compliance with licensing requirements.
Company structure
- At least one shareholder (no nationality restriction or residency restrictions)
- At least one director (cannot be legal persons and need not to be shareholders of the corporation)
Confidentiality
- Beneficial owners’ details – Not part of public record
- Shareholders’ details – Details of shareholders are not available to the public
- Directors’ details – Details of directors are publicly disclosed
Taxation
- Corporate income tax is imposed at both federal, communal and cantonal levels.
- The Federal effective tax rate is 7.83%.
- Each canton has its own tax legislation and levies cantonal and communal income and capital taxes at different rates. The combined effective tax rate is between 11.5% and 24.2%, depending on the corporate place of residence in Switzerland.
- Under certain conditions, companies with predominantly foreign business activities may have cantonal and communal tax reduction or exemption and taxed at an effective tax rate between 7.83% to 11% on foreign-source income
- Dividends received are usually taxable.
Secretary / Resident Agent – The company may appoint a secretary, but it is not mandatory
Registered address – Corporations must have a registered office in Switzerland
General meeting – Shareholders should have an annual general meeting within 6 months from its financial year-end. Meeting should take place in Switzerland, can only be held physically. Attendance by videoconference, teleconference, or circular letter is not permitted. Alternatively, shareholders can participate by proxy.
Electronic signature – Permitted
Procedure of license obtainment in Switzerland
In order to obtain a license, the following steps will be carried out:
- Collection of documents satisfying the AML requirements
- Incorporation of the Switzerland company (includes provision of registered office and secretarial services)
- Bank account set-up
- Filling license application:
- preparing the application forms;
- preparing individual questionnaires for individuals and bodies corporate;
- reviewing and amending the business plan and other policy documents forming part of the application;
- attending to the FINMA in respect of the applications.
Please, contact our specialists for more information about fees and personal requirements for your project.