The Czech Republic is going to put into effect a significant tax reform which will exempt Bitcoin and other digital assets from capital gains tax if kept for over three years. 

The law, passed by President Petr Pavel and enshrined into Czech law, is designed to harmonise the crypto regulations on the Czech Republic with the European Union’s Markets in Crypto Assets (MiCA) framework.

New Tax Law for Digital Asset Holders in the Czech Republic

According to the new law, the people who hold digital asset for more than three years will not pay the income tax on the profit from sale of their assets. The tax is exempt for private transactions and applies only to businesses whereas private investors will still enjoy the reform. It is expected that the measure will enter into force in the middle of 2025.

This is a result of the Chamber of Deputies’ approval to the same bill in Jan, and part of a redistribution of financial regulations in the Czech Republic. The country is trying to treat digital currencies like regular financial instruments so as to get rid of such tax disadvantages on crypto investors.

Bitcoin in Czech National Bank’s Reserves

A finance ministry spokesperson said the new tax framework brings much needed clarity and fairness to digital asset taxation. This acts to encourage long term investors the same way that traditional securities would.

The Czech Republic is in effect the first pro crypto currency jurisdiction in the European Union, a move that could be instrumental in changing related course in other member states. On top of that, the Czech National Bank might consider Bitcoin among its foreign exchange reserves that will soon interest the citizens more.

It’s Official

Czech Central Bank Plans Bitcoin Reserve

(Bloomberg) pic.twitter.com/6GqCxN954Z

— Willem Middelkoop (@wmiddelkoop) January 29, 2025

Under this policy, experts suggest that we could see a rapid increase in the use of more digital assets in the country and innovation in the financial sector. The Czech Republic wants to strike a balance between the level of compliance with the new tax laws and the competitiveness of the financial ecosystem in general.