Tokens as part of an employee’s compensation package: Reporting requirements and tax implications in Switzerland - Tax and Legal blog


Tokens form a relatively new asset class which has experienced explosive growth in popularity over the last few years. But what exactly needs to be considered by employers and employees when tokens are used as incentives and make up part of an employee’s total compensation package?


Employers and employees need clear guidance as to the tax obligations related to use of tokens for incentivizing employees. Recently the Swiss tax authorities have responded to this need by issuing a long awaited workpaper (Kryptowährungen – Besteuerung | ESTV ( regarding crypto taxation and the tax implications of receiving tokens as employment income.

Tokens are inextricably linked to blockchain technology and have proven to be very versatile in their use. Initial Coin Offerings (ICO) respectively Initial Token Offerings (ITO) have increased in popularity to channel new investments into a company, but they quickly have proven to be enticing incentives for employees in certain industry sectors.

Below we will review the tax consequences of issuing employees or investors with three different types of tokens.

Utility tokens

Utility tokens grant the investor the right to use digital services. According to the Swiss tax authorities, since the exchange of services is based on a contractual relationship these tokens do not represent participation rights. Therefore, they do not generate the same reporting obligations and tax treatment as equity participation rights such as stock options, stock awards or restricted stock units.

If an employee receives utility tokens for free or at a lower cost than the fair market value, these tokens constitute a taxable benefit which would also give rise to social security withholding. Employers should declare this kind of benefit in the Swiss salary certificate separately from recurring salary.

Asset tokens with contractual basis

Asset tokens are issued to collectively raise funds without providing equity in the form of shares, bonds or collective investments. The legal relationship between the issuer and the investor is a contractual relationship that does not provide a claim for repayment of the investment, but the investor is entitled to a cash benefit that relates to a proportionate share of the benefit of the issuer (e.g. EBIT, license income or turnover).

As these asset tokens are based on a contractual relationship, the tax treatment is the same as for utility tokens (see above).

Asset tokens with participation rights

Sometimes investors receive payments in return for investments made into the issuing company.

If the employer provides shares for free or under the fair market value to their employees on this basis, the benefit would be considered taxable employment income at fair market value with social security consequences. Contrary to utility tokens or asset tokens based on a contract, these tokens would be considered as genuine equity participation rights that need to be reported and taxed accordingly. This means that the employer has to calculate and declare the benefit in the Swiss salary certificate and to provide the employee with an annex as stated in the Swiss equity participation ordinance “Mitarbeiterbeteiligungsverordnung MBV / Ordonnance sur les participations de collaborateur OPart”.

The asset tokens received have also to be declared for wealth tax purposes in the Swiss tax return using the tax value of the participation at the end of the year and any additional income received (e.g. dividends) would need to be declared as well.

The point of taxation for tokens considered under a genuine participation rights plan would be at the time of receipt of the benefit (or the legal entitlement if they don’t match). Should employers provide tokens to employees with a blocking period, then taxation point would be at receipt. Consequently, during this blocking period, the employer would still have a reporting obligation of the blocked tokens as per the Swiss reporting regulations.


Tokens are a new asset class and their use as part of an employee’s compensation package is more and more frequent. To avoid reporting issues, it is important for employers and employees alike to understand the tax consequences of the ICO’s and ITO’s and take necessary measures to stay compliant. In particular, employers should be attentive to whether distributed tokens could be qualified as genuine equity participation rights. The employee in turn has also to understand at what value to report their tokens in particular wealth tax purposes.

The workpaper published by the Swiss tax authorities provides a good overview and clarity in respect to the tax implications for tokens.

As tokens become a more common incentive vehicle, employers should ensure there is a proper tax and social security reporting framework and help benefitting employees meet their own personal tax reporting requirements.

As the cantons do not have to follow this approach, we recommend reviewing planned token distributions to the employees with the respective cantonal authorities.

If you have any questions on blockchain and cryptocurrencies specifically, please reach out to us and our team will be glad to support.

If you would like to discuss this topic, please do reach out to our key contacts below:

Key contacts

Stephen Turley 110x110

Stephen Turley - Senior Manager, Global Employer Services

Stephen is a Senior Manager with Deloitte’s Global Employer Services Department and a specialist in international taxation and personal income tax questions. With the growing demand for expertise and services in the Blockchain space he is part of Deloitte Switzerland’s team of Swiss crypto- and blockchain experts providing services in this area.

In addition, Stephen is a lecturer at the University of Applied Science Winterthur and a frequent speaker at public seminars. He holds a MLaw degree from Zurich University and a BA of Arts from Trinity College Dublin.


Kristina Bertschinger

Kristina Bertschinger - Manager, Global Employer Services

Kristina is a Manager with Deloitte’s Global Employer Services Department and is supporting both global companies as well as medium and small sized enterprises with their Global Mobility requests. She has considerable experience in the field of Swiss individual taxation, equity-based compensation and cryptocurrencies. She holds a MSc degree in Business Administration from Lucerne University of Applied Sciences and Arts.



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