ICOs in Switzerland – Opportunities and Challenges André Guedel Head Intl. HQs KPMG Switzerland Kyiv - Iforum 2018 - April 25, 2018

Welcome to Switzerland

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Topics ICO Ecosystem in Switzerland Regulatory/Legal and Tax Environment Commercial Considerations

ICOs in Switzerland

Examples of TGEs in Switzerland

Crypto Valley – a Global Brand Switzerland offers good conditions to launch an ICO Cryptofriendly and international environment ICO Industry Flexible Labor Law Attractive tax rates Example: Canton Zug accepts Bitcoin as payment for certain government fees Possibility to incorporate a company with Crypto currencies (seen in Canton of Zug)

Regulatory / Legal considerations

FINMA directive for ICO as of Feb 16, 2018 (1/3) Payment Tokens A token / coin can be used to purchase services and goods (which are not only provided by the issuer). No similarity to traditional financial instruments such as options, etc. E.g. Bitcoins and Ether Regulatory considerations: Payment tokens are not considered as a security. However, AML regulations apply (KYC) Either membership with SRO Or directly supervised by FINMA

FINMA directive for ICO as of Feb 16, 2018 (2/3) Utility Tokens Token / coin can be used to access a specific service (platform). Regulatory considerations: Utility tokens are not considered as a security. However, functionality of token at the time of issuance is required. Practice of the FINMA is not fully known yet.

FINMA directive for ICO as of Feb 16, 2018 (3/3) Asset / Security Tokens Token / coin provides for profit sharing or other forms of compensations Regulatory considerations: Asset tokens are considered as a security. Issuance of asset tokens may need a prospectus. Listing on the secondary market is not possible exchanger topic

Legal entity: AG, GmbH or Foundation Further Requirements . Legal entity: AG, GmbH or Foundation Substance: Functions/Assets/Risk in Switzerland AML/KYC: In certain cases SRO membership required Exchangers: Require Membership at a SRO

Tax considerations

Overview Swiss Tax System Profit tax / capital tax Income tax / wealth tax Federal/Cantonal/Communal Tax authorities ETR: 12.4% - 24.2 % ETR: 22.5% - 46.0 % (Reduced taxation on dividends from qualified participations)

Income Tax rates in Cantonal capital cities Schaffhausen 16.0% Basel Thurgau 16.4% Thurgau 22.2% Aargau Aargau 19.2% Zurich 21.2% BL Z Zurich 16.5% Zürich 21.2% ü rich AI 20.8% 14.2% Jura Jura 20.7% AR 13.0% SO St. Gallen 17.4% 21.9% Zug St. Lucerne 12.3% 14.6% Zug Lucerne 12.2% Luzern Gallen Neuchatel Schwyz Schwyz 14.9% Neuchâtel Glarus Glarus 17.0% NW 12.7% 15.7% OW Bern 21.6% 12.7% Uri Uri 15.1% Grison Fribourg Grisons Vaud 19.9% 16.7% 22.8% Ticino Ticino Geneva 20.7% 24.2% Valais Legend: German speaking canton French speaking canton Bi-lingual canton (German/French) Italian speaking canton Tri-lingual canton (German/Italian/Rhaeto-Romanic) 21.6%

Topics to be considered Launch of ICO Post ICO Transactions Incorporation Tax treatment of funds generated by ICO, e.g.: Prepayment of customers Provision for development of platform Place of effective management Profit repatriation (DTT reg. WHT rates) Transfer pricing considerations VAT registration & compliance Filing of tax return No income tax No capital tax No stamp duty Fees for incorporation To be pre-discussed with tax authorities in the form of a tax ruling

Commerical considerations

Milestones & timeline ICO Info collection Bank account opening Incorporation Proper documentation (Whitepaper / T&C / Prospectus) Post-ICO support Tax ruling Finalization of ICO documentation No-Action Letter FINMA or Initiation of FINMA Licensing Procedure 3 - 5 months KPMG Workshop ICO KPMG support «2nd Phase»

Looking forward ICO 2.0 ICO 1.0

Thank you very much!

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