Czech Republic abolishes capital gains tax on Bitcoin held over three years

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Key Takeaways

The Czech Republic has exempted Bitcoin held for more than three years from capital gains tax starting 2025.
The legislation requires the assets not to be part of business assets to qualify for the tax exemption.

The Czech Parliament has voted in favor of a proposed amendment that exempts capital gains from the sale of Bitcoin and other crypto assets from personal income tax, as shared by prominent financial analyst and entrepreneur Kristian Csepcsar.

No capital gains tax on bitcoin has just been passed in The Czech Republic with all members of the parliament voting for it 🇨🇿🔥 pic.twitter.com/i7E8aZHC2W

— Kristian Csepcsar (@KristianCsep) December 6, 2024

According to Pavol Rusnak, co-founder of SatoshiLabs, the company behind the world-renowned Trezor hardware wallet, the amendment was passed by 169 votes on December 6, with nearly all parliamentarians backing it.

Czech Republic abolishes capital gains tax on Bitcoin held over three years — Source: @PavolRusnak

Under the new policy, individuals will not be required to pay capital gains tax on profits from Bitcoin and other crypto assets if they meet two conditions—total gross income from crypto asset sales in a tax year must not exceed CZK 100,000 and the crypto assets must be held for more than three years, according to an October report from KPMG.

The exemption is similar to the existing exemption for securities. It has been part of ongoing discussions on comprehensive reforms in crypto taxation in the country. These reforms are intended to align with EU regulations and could further shape how digital assets are treated under Czech law. The Czech government aims to foster a more favorable environment for crypto investors, as well as participation in the crypto market.

Previously, profits from crypto transactions were subject to a capital gains tax rate that varied between 0% and 19%, depending on the nature of the gains and other factors. The typical tax rate for personal income derived from trading crypto was set at 15%.

Assets acquired before 2025 may qualify for the exemption if sold under the specified conditions in subsequent tax years.

However, the legislation leaves some technical aspects unclear, including methods to verify ownership duration, and operates without an explanatory memorandum to address potential ambiguities.

The Czech authorities haven’t released additional guidance on implementing the new rules, leaving taxpayers and practitioners to rely on general principles. Without a dedicated definition of digital assets in the Income Tax Act, the exemption could potentially apply to various types of crypto holdings.