Czech Republic Removes Tax on Long Term Bitcoin Holdings
Czech President Petr Pavel signed a comprehensive digital finance law on February 6, 2025, introducing significant changes to cryptocurrency regulations. The legislation removes capital gains tax on Bitcoin and other crypto assets held for more than three years, aligning the country with other crypto-friendly European nations like Germany, Switzerland, and Liechtenstein.
The new law establishes a value threshold of 100,000 Czech koruna (approximately $3,900) for tax-free transactions, removing reporting requirements for small-scale crypto payments. This change eliminates previous barriers where every cryptocurrency payment was considered taxable income, making daily transactions more practical for users.
The legislation follows a broader strategic shift in Czech financial policy. On January 31, Czech National Bank (CNB) Governor Aleš Michl announced plans to propose converting up to 5% of the bank's €140 billion reserves into Bitcoin. This move would make the CNB the first western central bank to hold cryptocurrency assets. The bank's analysis suggests such an investment over the past decade would have increased annual returns by 3.5 percentage points.
A key provision of the law grants cryptocurrency companies the right to bank accounts, addressing a long-standing challenge in the industry. Licensed crypto exchanges and businesses will now have equal access to banking services, resolving previous difficulties in opening accounts with Czech banks, particularly for crown-denominated transactions.
The CNB will serve as the primary regulator for the cryptocurrency market. The bank can impose fines of up to 50 million crowns for rule violations and has the authority to revoke licenses from crypto service providers. The CNB will maintain registries of authorized crypto asset issuers, including those licensed in other EU countries.
The legislation brings Czech regulations in line with the European Union's Markets in Crypto-Assets (MiCA) framework, establishing stringent standards for virtual asset trading. Minister of Finance Zbyněk Stanjura expects the new rules to streamline the market, with estimates suggesting only dozens of licensed cryptocurrency traders will operate under the framework. The law also protects consumer interests by requiring service providers to demonstrate professional competence and properly explain the nature of crypto assets to customers.
