Shielded Labs does not currently have tax exempt status, but is taxed as a non-profit on a cost+ basis.
After Shielded Labs was organized, I applied for tax exempt status on the advice of Swiss legal counsel. However, after three or four months of deliberation, the tax authorities rejected the application. I was surprised with the outcome because Shielded Labs seemed to meet all the requirements for tax exempt status.
Shortly after the rejection, I spoke to the COO at Nym, which is also based in Switzerland. He said it was a mistake for Shielded Labs’ legal counsel to advise me to apply for tax exempt status right away; that the tax authorities expect the organization to first prove it is meeting the requirements on an ongoing basis before applying. So, Shielded Labs intends to apply again at some point in the future.
As I mentioned above, Shielded Labs is taxed as a non-profit on a cost+ basis. What that means is if Shielded Labs receives CHF 500,000 in donations and has operational costs of CHF 350,000 in 2023, the “profit” for 2023 would amount to CHF 17,500 (350,000 x 5%). Shielded Labs would pay 7.75% profit tax on the CHF 17,500, amounting to CHF 1,356.25 (17,500 x 7.75%), which is equivalent to a tax rate of 0.39% (of the CHF 350,000 spent). There is also a negligible capital tax in Zug of 0.5% of profit.
Shielded Labs is not subject to capital gains tax. So, if it holds ZEC and the price increases significantly between the time the ZEC is acquired and the time it is liquidated to cover operational costs, there is no tax liability on the gains.