Cryptocurrency Trading Is Welcome For All In Czech Republic
Liberal regulation and a high level of IT culture in the Czech Republic have led to a cryptocurrency boom. Many fintech startups are operating in the country. The Czech Republic was one of the first in Europe to take steps to soften the regulation of cryptocurrencies and their status in the country. According to the current regulations, cryptocurrency transactions weren’t restricted in any way by the law of the country, only EU legislation was applied to them.
According to the National Bank, cryptocurrencies don’t pose a threat to the traditional banking system. Officially, they’re not considered a means of payment in the Czech Republic and aren’t subject to the law on payment systems. The Czech National Bank considers virtual currencies as intangible assets, which means they can be subject to VAT. At the same time, no permission is needed to trade in Bitcoin, and buying or selling it isn’t subject to state supervision.
Legal status of digital currencies
According to the law on combating money laundering and terrorist financing, banks, cryptocurrency exchanges, and traders are obliged to confirm the identity of customers for transactions with cryptocurrencies worth a thousand euros or more. However, these changes don’t apply to Czech firms that accept digital currency payments for goods and services.
In the Czech Republic, cryptocurrencies aren’t considered a means of payment, but intangible assets. They’re not subject to payment system legislation and don’t require any special permits to operate them. Profits made in the form of cryptocurrencies are subject to capital gains tax and VAT is also applied to cryptocurrencies. Among other things, payments in virtual currencies must be recorded in the electronic revenue accounting system.
The Czech Republic ranks sixth in the world in the number of ATMs installed. Globally, there are almost 5,000 of them, but in the Czech Republic, there are about 70. Most of them are found in Prague. They can be found not only in large shopping centers and electronics stores but also at metro stations or on newsstands.
According to the Central Bank’s position, operations with digital money aren’t subject to licensing and additional taxes. But profits made by companies in the form of cryptocurrencies are subject to the usual capital gains tax. In the Czech Republic, cryptocurrencies are equated to goods, which isn’t considered a payment instrument. But if a company or individual makes a profit (incurs a loss) when buying or selling cryptocurrencies, it must necessarily be declared in their tax reports and the corresponding tax must be paid.
The corporate income tax rate in the Czech Republic is 19%. Income tax for individuals and sole proprietors in the Czech Republic is 15% and applies to the following types of profits: wage labor, business, income from rent, and other activities. Income from the purchase of shares, from the donation of real estate, and from inheritance aren’t taxed. Annual tax returns must be filed by all citizens and foreigners who’ve been living in the Czech Republic for at least 183 days at intervals or continuously.