The trial scheme, in the town of Zug, will begin on 1 July and run until the end of the year, the Swiss Broadcasting Corporation reports. Residents will be able to make payments of up to 200 Swiss francs ($200; £140) using the crypto-currency, in what the broadcaster says is a world first.
Mayor Dolfi Mueller says the council wants to show its "openness to new technologies" and cater to local financial technology companies. The area is known as the "crypto-valley", as it hosts more than a dozen companies specialising in Bitcoin-related activities. At the end of the trial period, the council will decide on whether to expand Bitcoin payments to other government services.
Not all local officials are convinced that it's a smart move. "It is highly concerning that a state institution should accept Bitcoin, since it is not a secure currency," councillor Gregor Bruhin tells Neue Zuercher Zeitung. "The town of Zug could undermine the status of cash with its actions," he says.
Mayor Mueller seems unconcerned though, telling the paper: "I can imagine that in the near future it will be possible to pay your tax bill with Bitcoin."