New Law Establishes Tax Clarity, Regulatory Stability, and Aligns with MiCA
President of the Czech Republic, Petr Pavel, signed a key piece of legislation today that will shape the future of the cryptocurrency industry in the country.
The new law aligns tax rules for cryptocurrencies, ensures a stable regulatory framework, and implements the European MiCA regulation in a way that promotes innovation and industry growth. This move positions the Czech Republic as an attractive destination for modern cryptocurrency projects.
The Czech Republic and Largest Czech Cryptocurrency Magazine Celebrate the President’s Signature
Collaboration with the Cryptocurrency Community
The Czech Cryptocurrency Association, which has long advocated for a fair business environment, played a crucial role in the creation of this legislation. According to the association’s chairman, František Vinopal, achieving political consensus on such a law was previously unthinkable. However, political unity across the spectrum has now been reached.
Vinopal emphasized that this success is the result of collaboration not only between the association but also the broader cryptocurrency community.
Key Legislative Changes
The new legal framework introduces clear rules for the taxation of cryptocurrency transactions, ensuring long-term stability and predictability for entrepreneurs. Key points include:
- Guaranteed right to a bank account for cryptocurrency companies that meet licensing requirements—one of the sector’s long-term priorities.
- A dual taxation regime for 2025, due to delays in passing amendments that would align taxation of crypto profits with other investment instruments and largely exempt them from the 15% tax rate.
Challenges with Transitional Taxation
Due to the delay, investors will still have to pay taxes on cryptocurrency sales for at least part of the year. This will create complications when filing tax returns for 2025.
The new tax regime will apply to cryptocurrency transactions realized only from the date the law comes into effect. Transactions conducted before this date will still be taxed under previous rules, which may create challenges for investors when preparing their tax reports.
“When filing a tax return, we will need to know exactly when the income from cryptocurrency sales was realized, as income received before the law takes effect cannot be exempted based on the holding period,” warns Matěj Nešleha from the tax consultancy firm KODAP, as reported by Alžběta Vejvodová on ceska-justice.cz.
Impact on Czech Investors and the Economy
Approximately one-quarter of KODAP’s clients invest in cryptocurrencies or related financial instruments.
According to the Czech Cryptocurrency Association, the new taxation rules will impact hundreds of thousands of Czech citizens.
“Most retail investors in the Czech Republic invest sums in the range of thousands to tens of thousands of Czech korunas. Significant investments in the millions are primarily observed among advanced investors and businesses,” explains Vinopal.
The delay in implementing the new tax regime will negatively impact GDP growth, as the taxation structure is essential for a healthy investment market. By equalizing cryptocurrency taxation with other asset classes, the Czech Republic is following the lead of Germany, Switzerland, and Liechtenstein, where similar policies have already been implemented.
Clear tax rules are expected to boost trust in the sector and increase its attractiveness for new businesses.
Czech Republic as a Cryptocurrency Leader
By signing this legislation, the Czech Republic strengthens its position as a European leader in cryptocurrency innovation. The cooperation between the cryptocurrency sector and policymakers is fostering an environment conducive to the growth of crypto exchanges, trading platforms, and blockchain software and hardware companies.
However, the failure to pass the law before the end of 2024 is a setback for the crypto industry and investors.
“The legal environment for crypto assets remains uncertain. This could slow market growth and create uncertainty for both domestic and foreign investors, who often prefer jurisdictions with clear regulations,” warns Vinopal.
He also estimates that the delayed approval of the law could cost the Czech economy tens of billions of Czech korunas in lost growth.
New Tax Exemptions for Cryptocurrency Investors
The amendment introduces two new tax exemptions for cryptocurrency transactions:
- Annual crypto income under CZK 100,000 will be tax-free.
- A time-based exemption applies to annual crypto income between CZK 100,000 and CZK 40 million—investors will only pay tax if they held the assets for less than three years. If they held them longer, no tax will be due.
Example from Matěj Nešleha (KODAP):
A Czech investor bought crypto in 2020 for CZK 2 million and sold it for CZK 10 million.
- If the sale happens before the new law takes effect, they would owe CZK 1.7 million in income tax.
- If the sale happens after the new law takes effect, they would pay no tax at all.
The new framework aligns the Czech Republic’s crypto taxation with leading European financial hubs, enhancing the country’s competitiveness and attractiveness for crypto businesses and investors.
Source: Kryptomagazin.cz
