Reichlin Hess obtained a leading tax ruling regarding the treatment of the income from an Initial Coin Offering (“ICO”) for income tax purposes. In a nutshell, the ruling takes the common approach of recording a provision for future expenses one step further as the income is treated differently depending on the success of the ICO. The income from the ICO is, therefore, split into different sections according to certain milestones reached. This approach provides more flexibility to the founders for the future usage of the funds generated with the ICO. This is of particular relevance since it is usually a challenge to anticipate the success of an ICO in advance.
This could represent a model case for other ICOs in connection with utility tokens in the future.