Czech Republic Boosts Crypto Investments: Bitcoin Tax Exemptions and Reserve Considerations

The Czech Republic has announced a significant shift in its approach to cryptocurrency investments, exempting Bitcoin and other digital assets from capital gains tax if held for over three years. This new regulation, set to take effect in mid-2025, aims to create a more favorable environment for cryptocurrency investors in the country.

The tax exemption applies to individual investors and non-business activities, eliminating previous disadvantages for long-term cryptocurrency holders. Under the new rules, individuals who sell Bitcoin or other digital assets after a holding period of three years will no longer be required to pay income tax on profits. This change mirrors the tax treatment for long-term stock investments in the country.

The Czech Chamber of Deputies approved the new law in January, with the move being part of broader efforts to modernize the country’s financial regulations. This law brings the Czech Republic’s crypto taxation in line with the European Union’s Markets in Crypto-Assets (MiCA) regulations, which aim to create a unified regulatory framework across EU member states.

In another notable development, the Czech National Bank is currently reviewing a proposal to add Bitcoin to its reserves. However, this process may take several months, and sources suggest that any exposure to Bitcoin will be significantly lower than the initially proposed 5% of reserves. The idea was introduced by Czech National Bank Governor Ales Michl, but it has faced resistance from European Central Bank President Christine Lagarde, who has stressed the need for liquidity and security in reserve assets. In light of this, the Czech National Bank has commissioned a study to assess the feasibility of adding Bitcoin to its reserves. Governor Michl has stated that he will respect the findings of the study, even if it concludes that the proposal is not viable.