Liberation of Crypto-Activities

On 22 January 2025, the Senate approved an amendment to Act No. 586/1992 Coll. on Income Taxes ("ITA"), which brings changes in the area of taxation of cryptoassets. Newly, certain income of individuals from the transfer of cryptoassets for consideration will be exempt from tax if they meet the specified conditions:

1. The value test: income from the transfer of cryptoassets for consideration (except for electronic cash tokens) is exempt if the total amount of such income does not exceed CZK 100,000 in the taxable year. This exemption does not apply to income from capital assets and to income from the transfer of cryptoassets included in business assets within 3 years of the cessation of the activity from which the self-employment income is derived.
    
2. Time test: Income from the transfer of crypto-assets for consideration is exempt if the period between the acquisition and the transfer exceeds 3 years. Again, there are exceptions for crypto-assets included in business assets where the exemption cannot be claimed within 3 years of the cessation of the relevant activity. In the case of the time test, the exemption is limited to 40 million euro. CZK of gross income in the tax year. This limit will be considered in aggregate together with income from the transfer for consideration of securities and shares in business corporations.

The amendment to the ITA will come into force on the day after its publication in the Collection of Laws. Currently, it depends on the signature of the President and subsequent publication. The exemption of income from transfers of cryptoassets for consideration will apply to transfers made after the amendment takes effect, including those acquired before that date. For the value test and the exemption limit of up to 40 million. Only transfers after the effective date will be counted. It should be noted that all income from the sale of cryptoassets, business shares and securities must be aggregated for the calendar year and assessed against the limit together.

If you have questions about the taxation of cryptoassets, our tax team is available to assist you.

Author: Alexa Horváthová