- Bitcoin and other cryptocurrencies held for over three years will be exempt from capital gains tax in the Czech Republic.
- The new law introduces a cap on total crypto gains at 40 million Czech crowns, aligning with securities taxation.
- Experts support the reform for fostering long-term Bitcoin investment but emphasize the need for clearer guidelines.
The Czech Republic has reformed its cryptocurrency taxation policy, introducing exemptions for Bitcoin and other digital assets held for over three years. The amendment, approved on December 6, 2024, aims to align cryptocurrency taxation with the framework for other financial instruments, such as securities.
This policy will take effect on January 1, 2025, offering significant tax relief to long-term investors and encouraging compliance in the burgeoning crypto space.
Under the new regulations, income generated from the sale of cryptocurrencies held for at least three years will no longer be subject to capital gains tax. Additionally, the policy allows individuals to exclude earned income from their income tax if their total cryptocurrency earnings do not exceed 100,000 Czech crowns in a given year.
The exemption extends only to digital assets not utilized for business purposes within three years following the cessation of self-employment. Pre-2025 purchased assets will also be eligible for this exemption, provided they meet the stipulated conditions.
The law further caps total gains from securities, business shares, and cryptocurrency transactions at 40 million Czech crowns, maintaining consistency with securities taxation principles.
The Czech Republic levies a flat 15% tax on individual Bitcoin revenues and 19% on corporate holdings, with an additional 23% applied to high-income earners. The reform simplifies taxation for long-term holders but raises certain ambiguities.
Taxpayers have raised questions about determining the holding period for assets and whether all types of digital assets qualify for the exemption. The lack of a clear definition of “digital assets” in the Income Tax Act has left room for interpretation, prompting calls for more detailed guidelines.
The reform has received strong backing from cryptocurrency experts and organizations. Analysts from KPMG and industry stakeholders such as BTC Prague have praised the alignment with established securities taxation practices, emphasizing the potential for fostering long-term Bitcoin investment.
This change positions the Czech Republic among countries that are updating tax codes to accommodate cryptocurrency adoption. For instance, Italy recently reduced its capital gains tax on crypto from 42% to 28%, showcasing a similar shift toward progressive crypto taxation policies.
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