Value and Time Test for Cryptocurrency Exemption

During October and November, the House of Representatives will debate major bills related to cryptocurrencies. In particular, the public is in anticipation of the passage of a bill that would put the taxation of cryptocurrencies on the same level as, for example, equities, simplifying the considerable paperwork for cryptocurrency users as well as the taxation of cryptocurrency profits. The bill has now passed the Budget Committee and is expected to pass its third reading.

If the proposal is approved by the House, a time and value test could be introduced for cryptocurrencies, similar to that for shares. This would mean that owners of cryptocurrencies would not have to pay income tax on their sale if they held the asset for at least three years (time test) or realised income from the sale of cryptocurrencies totalling up to CZK 100,000 during the tax year (value test). The exemption should not apply to income from capital assets and to income from the transfer for consideration of crypto-assets that are or have been held as business assets.

Cryptocurrencies are perceived in society primarily as a type of investment, but according to the current interpretation they do not officially fall within this area. It is worth noting that the adoption of the proposal would remove the current inconsistency where, for example, bitcoin and bitcoin ETFs are taxed differently.