Key Points
- The Czech Republic has passed a law exempting Bitcoin and other digital assets from capital gains tax if held for over three years.
- The Czech National Bank is considering the inclusion of Bitcoin in its reserves.
The Czech Republic has enacted a new law that exempts Bitcoin and other digital assets from capital gains tax if they are held for more than three years.
The law was signed by President Petr Pavel, aligning the country’s digital asset taxation with that of traditional securities.
Tax Exemption for Crypto
This tax exemption is applicable to individuals and non-commercial activities, removing prior tax disadvantages for long-term cryptocurrency investors. The new amendment, which is set to come into effect in mid-2025, aligns the Czech Republic’s regulatory structure with the European Union’s Markets in Crypto-Assets rules.
This legislation was approved by the Chamber of Deputies in January as part of wider efforts to modernize the nation’s financial regulations. Under the new legislation, Bitcoin holders who sell their assets after three years will not be liable for income tax on the profits, which mirrors the tax treatment of long-term stock investments.
Bitcoin in Czech Reserves
The Czech National Bank is currently examining a proposal to include Bitcoin in its reserves. However, the process could take several months and the exposure would likely be significantly less than the initially suggested 5%, according to sources.
The proposal was introduced by Governor Ales Michl, but was dismissed by European Central Bank President Christine Lagarde, who highlighted the necessity for liquidity and security in reserves.
In response to this, the Czech National Bank has commissioned a study to assess the feasibility of Bitcoin. Michl has stated that he would accept the findings of the study, even if they recommend against the proposal.