Czech Republic: Bitcoin Tax Exemption Boosts Crypto Appeal

The Czech Republic has enacted a crypto-friendly law, exempting Bitcoin and other digital assets from capital gains tax if held for more than three years. President Petr Pavel signed the law, aligning the country's crypto taxation with traditional securities. The tax exemption applies to individuals and non-business activities, eliminating previous tax disadvantages for long-term crypto investors. The amendment is set to take effect in mid-2025 and brings the Czech Republic's regulatory framework in line with the European Union's Markets in Crypto-Assets rules.

The Chamber of Deputies approved the law in January as part of broader efforts to modernize the country's financial regulations. Under the new rules, Bitcoin (BTC) holders who sell their assets after three years will no longer owe income tax on profits, mirroring the tax treatment of long-term stock investments.

The Czech National Bank is reviewing a proposal to add Bitcoin to its reserves, but the process may take months, and any exposure would be far lower than the initially suggested 5%, sources say. Governor Ales Michl introduced the idea, but European Central Bank President Christine Lagarde dismissed the proposal, emphasizing the need for liquidity and security in reserves. In response, the Czech National Bank commissioned a study to evaluate Bitcoin's feasibility, with Michl stating he would accept its findings, even if they reject the plan.