Czech Republic Passes Legislation Exempting Bitcoin from Capital Gains Tax
The Czech Republic has taken a significant step in the cryptocurrency space by passing legislation that exempts Bitcoin and other digital assets from capital gains tax if held for more than three years. President Petr Pavel signed the law, marking a milestone in the country’s crypto taxation regulations.
The new law, reported by BTC Prague, now aligns the taxation of cryptocurrencies with traditional securities in the Czech Republic. This move provides a tax exemption for individuals engaged in non-business activities, eliminating previous tax disadvantages that long-term crypto investors faced. The amendment is expected to come into effect in mid-2025, bringing the country’s regulatory framework in line with the European Union’s Markets in Crypto-Assets rules.
Tax Benefits for Long-Term Crypto Investors
Under the revised rules, Bitcoin holders who hold their assets for more than three years and then sell them will no longer be subject to income tax on the profits. This favorable tax treatment mirrors that of long-term stock investments, aiming to encourage and support long-term investment in cryptocurrencies.
Czech National Bank Considers Bitcoin Reserves
The Czech National Bank is currently evaluating a proposal to add Bitcoin to its reserves, although the process is expected to take several months. Sources suggest that any potential exposure to Bitcoin in the reserves would be significantly lower than the originally suggested 5% allocation.
While Governor Ales Michl introduced the idea of including Bitcoin in the reserves, European Central Bank President Christine Lagarde expressed concerns regarding the need for liquidity and security in reserve assets. In response to these concerns, the Czech National Bank has commissioned a study to assess the feasibility of including Bitcoin in its reserves. Governor Michl has stated that he will abide by the findings of the study, even if they do not support the plan to add Bitcoin to the reserves.
