Case Study

Gnosis partners with Toku for Swiss employment services and locally compliant token grants

September 7, 2023

Gnosis partners with Toku for Swiss employment services and locally compliant to
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Gnosis is a blockchain technology provider developing various infrastructure and tools to support web3 ecosystems. Gnosis’ technologies and ecosystem aim to empower users by providing them with a suite of tools and infrastructure that enable developers and communities to build and deploy their own decentralized applications and services, and participate in the decentralized economy.  

The Gnosis core team is globally distributed across multiple jurisdictions in various continents. As such, local compliance is core to Gnosis’s global operations.

Addressing the real world needs of contributors while continuing to offer token grants

Gnosis has strong legal, accounting and finance teams, well-equipped to handle token compensation for their global contributor-base.

Gnosis realized however that contributors in their global workforce have personal requirements that sometimes can only be fulfilled by an employment relationship. In some cases, contributors may require full-time employment for the purposes of obtaining a visa, for example, or may need employment verification or proof of income to get a mortgage. Gnosis was looking for a solution to address these needs, while also offering, in addition to fiat compensation, compliant token grants that would receive the correct tax treatment in applicable jurisdictions.

Swiss employment with locally compliant token grant awards

Gnosis partnered with Toku for a solution to continue to compliantly enter into a full-time employment relationship with a Swiss resident, involving both fiat and token (GNO) compensation. This required close collaboration with the Toku team to ensure an employment agreement and token option agreement in line with Swiss laws, and to build out how the option exercise program would take effect in practice.

This also required that the token option award reflected the obligations under Swiss law, including the requirement for token options to be treated as income to the employee from a tax perspective. On the employer side, Toku also provided information to Gnosis about the employer costs due on delivery of the token options to the employee. Toku was able to calculate the employee and employer tax obligation on the token options and remit payments on each to the FTA (federal tax administration) in Switzerland.

Technical note: In Switzerland, token payments such as token options qualify as bonus payments and are subject to social security contributions based on the fair market value at the time of receipt by the employee. Tax withholding is necessary on mandatory social contributions prior to delivering tokens to an employee.

Gnosis is able to save time each month in processing token compensation. On top of that, Toku has been able to provide visa support in Switzerland. This was made possible by working closely with Toku on the employment relationship, the token options agreement, and tax compliance.