Tax exemption of income from crypto-asset sales

The exemption will apply to crypto-asset transfers currently subject to taxation for individuals as so called other income. It should not apply to crypto-assets included in an business assets of an individual within 3 years of terminating independent activity.

Exemption conditions

The amendment establishes two basic tests for tax exemption of crypto-asset sales income, similar to securities. The first is based on transaction value, the second on holding period.

For value-based exemption, gross income from crypto-asset sales must not exceed CZK 100,000 in the tax period. This exemption does not apply to electronic money tokens.

The time test exempts income from crypto-assets held longer than three years. However, this exemption is limited by a shared CZK 40 million gross income limit per tax period, collectively applying to income from crypto-assets, securities, and business corporation shares sales, as detailed HERE. For a crypto asset that was owned before the law came into effect and from which income will be generated in 2025, unlike securities and shares, there is no option to value it at market price at the end of 2024 or at the date of sale.

Besides new exemption possibilities, the amendment unfortunately also brings significant uncertainties for its practical application. These include the lack of a definition of crypto-assets in the Income Tax Act and the absence of clear rules for situations where one type of crypto-asset is exchanged for another.

Defining crypto-assets for Income Tax Act purposes

The missing crypto-asset definition in tax legislation may be problematic. The Chamber of Tax Advisors is, however, now working with the Czech tax administration to clarify these terms.

Time test continuation for crypto-asset exchange

The new legislation introduces a different approach to the exchange of crypto-assets compared to the existing rules for securities, even though other provisions remain almost identical. For securities, maintaining the holding period for tax exemption is conditional on exchanging shares for shares of the same nominal value, as confirmed by the case law of the Supreme Administrative Court.  However, for crypto-assets, the holding period remains uninterrupted for any exchange conducted by the issuer, regardless of the type or value of the exchanged crypto-asset.

Effectiveness and lack of transitional provisions

The Amendment came into effect on 15 February 2025. Due to missing transitional provisions, it is unclear whether the new law will apply to all crypto-assets or only those acquired after effectiveness.

As we have already mentioned above, given numerous interpretational uncertainties, the Chamber of Tax Advisors has prepared materials for discussion with the General Financial Directorate to clarify key controversial issues arising from the amendment.

We will continue monitoring the development of interpretative practice and keep you informed of important clarifications. For any questions regarding the above, please contact our experts.

Authors:

Gabriela Ivanco, Tax Department Manager

Anna Klímová, Newsletter Editor