What will the planned amendment to the law bring?
The Chamber of Deputies is discussing a fundamental amendment to the Income Tax Act, which is intended to change the rules for taxation of income from crypto assets. If approved, the amendment will offer two main options from January 1, 2025, to exempt income from crypto currencies from tax: a value limit of up to CZK 100,000 and a time test for three-year holding. This article discusses the new proposals in detail and their impact on investors.
Value limit of CZK 100,000: Tax exemption of income from crypto assets
One of the new features is the exemption of income from the sale of crypto assets if their total gross income for the tax period does not exceed CZK 100,000. This expands the options for small investors to reduce their tax burden.
Practical examples:
Example: Exempt income Ms. Alice sells various cryptocurrencies, such as some Bitcoin and Ethereum, during 2025, and her total income is CZK 85,000. Since she did not exceed the value limit, her income is exempt from tax.
Time test: Exemption for three-year holding of crypto assets
The second key condition for income exemption is the time test. This mechanism allows for the exemption of income from the sale of crypto assets if they have been held for more than three years.
How does the time test work?
In order to apply the exemption, the investor must have held the crypto assets for more than three years. The exemption applies to the total gross income from the sale of crypto assets, with an upper limit of CZK 40 million per year.
Example: Successful application of the time test Mr. Jan bought Ethereum in January 2020 for CZK 500,000. In March 2025, he sells this crypto asset for CZK 25 million. Since he held Ethereum for more than three years and the income did not exceed CZK 40 million, the entire income is exempt from tax.
Cryptoasset exchange and time test
Another important change is that exchanging cryptoassets (for example, when updating the protocol) does not interrupt the time test. This means that the holding period remains intact, which simplifies the process for investors. For example, when exchanging Ethereum for a newer version, the holding period is calculated from the original purchase, not from the exchange.
Cryptoassets in business assets: Exemption from tax relief
The exemption of income according to the value limit and time test does not apply to cryptoassets that are included in business assets. If they are used in the course of a business, the income from their sale is subject to standard taxation according to the rules for business activities.
Conclusion
The proposed amendment brings significant changes to the taxation of income from cryptoassets. The new rules offer flexibility and greater tax relief for long-term investors. At the same time, however, they maintain stricter regulations for high-income and crypto-asset trading activities.
