Czech Republic exempts long-held Bitcoin from capital gains tax

The Czech Republic has announced a tax policy that does not tax Bitcoin that has been held for three or more years. This amendment was approved on December 6, 2024, and will be effective from January 1, 2025.

According to the new law, citizens are allowed to exclude earned income from their personal income tax if they earned up to 100,000 Czech crowns from cryptocurrencies. The exemption will also apply to Bitcoin and other digital assets that were owned for three or more years before being sold.

The policy brings cryptocurrency taxation compliance in line with the current regulation of other financial instruments, including stocks. However, it does not include electronic cash tokens and takes effect only for assets that are not used in business for at least three years after cessation of self-employment.

The amendment is similar to tax exemptions applicable to securities transactions, which caps the total gains from securities, business shares, and cryptocurrencies at CZK 40 million.

Simplified tax framework, lingering questions

At the moment, the Czech Republic levies a flat rate of 15% on Bitcoin revenues for individuals and 19% for companies. Those people who earn high wages are taxed at a rate of 23%. The new changes that are to be implemented permit pre-2025 purchased assets to be exempted based on the new provisions.

However, the reform has some ambiguity in some areas. Taxpayers are also not sure how to establish the period of possession. Additionally, they are seeking to know whether all types of digital assets are exempted from tax under the law. In particular, the Income Tax Act does not offer a clear definition of digital assets, which has left many people in the dark.

Experts support for tax reform

This amendment has been applauded by experts in cryptocurrency. BTC Prague pointed out that the support for the law was unanimous. He further stated that the exemption could lead to long-term Bitcoin investments. KPMG noted that the framework is based on securities taxation principles that are already known.

The Czech Republic actively promotes HODLing by cancelling capital gains tax on #Bitcoin held for longer than 3 years in a unanimous vote!@BraiinsMining Chief of Propaganda @KristianCsep has the details ⬇️ https://t.co/YXUzcDBbbn— BTC Prague (@BTCPrague) December 6, 2024

This move puts the Czech Republic on the list of countries that have changed their tax codes to support cryptocurrency usage. For example, Italy recently cut down its capital gains tax on crypto from 42% to 28%.

In a related development, US-based spot Bitcoin ETFs have now taken over Satoshi Nakamoto as the biggest holders of Bitcoin as pointed out by ETF analyst Eric Balchunas. These ETFs together hold 1.104 million BTC which is almost equivalent to the estimated 1.1 million BTC of Satoshi.

KING OF THE HILL: The US spot ETFs have just passed Satoshi in total bitcoin held, now hold more than 1.1m, more than anyone in the world, and they're not even a year old yet, literally babies still. Mind blowing. h/t @EdmondsonShaun for the data pic.twitter.com/FQBIGGz5ei— Eric Balchunas (@EricBalchunas) December 6, 2024

BlackRock’s iShares Bitcoin Trust (IBIT) has already garnered more than $50 billion in total assets and is expected to own the most Bitcoin in 2025. Other large investors include Binance, Microstrategy, and the U.S. government. It is still unclear how many coins belong to Satoshi; the current estimates are that he holds 1.124 million BTC in 36,000 wallets.

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