Czech President Petr Pavel signed a bill that exempts Bitcoin and other digital assets from capital gains tax after three years of holding. This move removes some tax challenges faced by crypto holders in the country.
Cryptocurrency Taxation in Czech Republic
Under the new law, holders of cryptocurrencies who sell their assets after three years will not have to pay capital gains tax on their profits. Additionally, there are tax exemptions for transactions up to CZK 100,000 (around $4,136). For these exemptions to apply, the crypto assets must not be part of business assets, following similar regulations for traditional assets, including securities.
Positive Reaction from Crypto Industry
The move has been positively received by the crypto industry, including Kraken Exchange, which sees it as an encouragement for long-term holding of crypto. However, the positive news has had little impact on the market, with Bitcoin down about 1%, and other assets also declining in the past 24 hours.
Potential Inclusion of Bitcoin in Central Bank Reserves
Recently, the board of the Czech National Bank approved a proposal by Governor Ales Michl to consider adding Bitcoin to its reserves. This could become the first attempt to diversify the country's 140-billion portfolio by potentially allocating up to 5% to Bitcoin over a decade. Yet, the proposal faces resistance within the country and from the European Central Bank, citing volatility and regulatory issues.
The Czech Republic has shown strong intent towards integrating cryptocurrencies into its financial system, which could significantly impact the European market despite existing resistance.
