If you’re from the Czech Republic, you have another good reason to hold onto your Bitcoin. The government has adopted a new tax policy Exempt Bitcoin from capital gains taxprovided that these assets are held for at least three years. The updated tax policy also exempts individuals from paying taxes if digital currency earnings exceed 100,000 Czech crowns.
The tax policy change granting exemptions to Bitcoin holders was passed on December 6, with all members of parliament approving the proposal, and will come into effect on January 1, 2025.
According to analysts, these are latest changes are similar to the tax exemptions on securities, limiting profits from shares, securities and cryptos to CZK 40 million.
New tax policy simplifies taxation, but some problems remain
While the new policy integrates crypto into existing tax rules that cover most financial instructions, it does not cover electronic money tokens. The tax change only applies to digital assets that are not used in business for at least 36 months immediately after self-employment. Furthermore, the adoption of this new policy has created a number of issues and problems that require immediate responses for some.
The Czech Republic actively promotes HODLing by abolishing capital gains taxes #Bitcoin held unanimously for more than 3 years!@BrainsMining Head of Propaganda @KristianCsep has the details ⬇️ https://t.co/YXUzcDBbbn
— BTC Prague (@BTCPrague) December 6, 2024
Currently, the country imposes a 15% tax rate Bitcoin turnover and 19% for companies. High-income earners are taxed at 23%. Under the new policy, assets purchased before the effective date may be exempt from the provisions.
However, the approved rules introduced some gray areas for some. For example, some taxpayers wonder how they will determine the ownership period. Many are also wondering whether the new tax law will cover all digital assets. Experts and observers say that even the country’s income tax law does not provide a specific definition of cryptocurrencies.
Experts OK with New Bitcoin Tax Policy
Although there were initial concerns, experts and the tax community have welcomed the change in tax policy. The government’s decision to update the tax policy for BTC is in line with the campaign to clarify taxation cryptocurrencies. With this new tax policy, the Czech Republic is ready for the ongoing regional digitalization and regulation at the European Union level regarding crypto.
The new tax policy towards Bitcoin could also encourage investor participation, in addition to support from tax experts and regulators. According to some experts, this new rule could encourage individuals to buy and hold Bitcoin for longer.
The Czech Republic joins other countries in updating tax rules
This move by parliament puts the Czech Republic on the list of countries that have updated their tax rules to reflect the growing popularity of digital assets. Italy, for example, has reduced capital gains taxes on cryptocurrencies from 42% to 28%.
The government’s tax treatment of Bitcoin and other digital assets comes as Bitcoin leads a market boom. Two days ago, Bitcoin reached the $100,000 mark and is now trading near this level. Also note that Bitcoin ETFs in the US are now the largest holders of Bitcoin, overtaking ‘Satoshi Nakamoto’. According to on-chain data, these funds now hold approximately 1.104 million Bitcoins.
Featured image from Adobe Stock, chart from TradingView