Synthetic Cash and Its Taxation: The Swiss Case

22 Pages Posted: 17 May 2018

See all articles by Francois Lhabitant

Francois Lhabitant

Kedge Capital Fund Management; EDHEC Business School

Date Written: May 4, 2018


Synthetic cash can be defined as a combination of non-debt financial instruments that provides, before tax, the same return as a debt instrument but under the form of capital gains rather than income. In countries where capital gains are taxed at a different rate than income, the existence of synthetic cash represents a real tax arbitrage opportunity. This article explores the tax treatment of synthetic cash in Switzerland, a country where capital gains are generally tax exempt. We discuss the various defense mechanisms available to the Swiss tax authorities to fight against synthetic cash, as well as the emergence of virtual currencies, which could constitute the next generation of synthetic cash.

Keywords: Tax Arbitrage, Income, Capital Gains

JEL Classification: G23, H20, H26

Suggested Citation

Lhabitant, Francois-Serge, Synthetic Cash and Its Taxation: The Swiss Case (May 4, 2018). Available at SSRN: or

Francois-Serge Lhabitant (Contact Author)

Kedge Capital Fund Management ( email )

28-30 The Parade
St Helier, JE1 1ZZ


EDHEC Business School ( email )

393 Prom. des Anglais
Nice, 06200

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