Is a tax revolution coming for cryptocurrency holders?

An important change is on the horizon for all cryptocurrency investors. On September 9, the Budget Guarantee Committee debated a bill that could exempt certain income from cryptoassets from income tax.

What exactly does this change entail? Two new clauses are proposed to the Income Tax Act that expand the possibilities of tax exemption. According to the proposal, the exemption would apply to income from the transfer of cryptoassets for consideration if their aggregate value does not exceed CZK 100,000 in a single tax year. Furthermore, a so-called three-year time test would be introduced. Income from the transfer of cryptoassets would be exempt from tax if at least three years elapsed between the acquisition and the transfer for consideration.

The proposed changes thus set similar conditions for the exemption of income from cryptoassets as will apply to securities from 1 January 2025. The newly introduced securities exemption limit of CZK 40 million per tax year would also apply to cryptoassets, and this limit would apply to the aggregate of all such exempt income taken together.

If the proposal is approved as drafted, the new rules would come into force on 1 January 2025. As there are no transitional provisions in the proposal, the rules would also apply to cryptoassets held before that date. Please note, however, that this is only a proposal at this time and may not be approved in this form.

We will continue to monitor the proposal and keep you informed of developments in the legislative process and this important change.