On 22 January 2025, the Senate of the Czech Republic approved a bill on the digitalisation of the financial market. The implementation of the European MiCA Regulation into Czech legislation has also significantly affected the Income Tax Act (“ITA”), as it will now allow taxpayers to exempt income from the sale of cryptoassets from personal income tax under the conditions set out in Section 4(1)(zj) and (zk) of the ITA.

The conditions for tax exemption are similar to those for securities, i.e. the time test will guarantee that if cryptocurrencies are held for more than 3 years, their sale will not be taxed (a common limit of CZK 40 million applies here as for income from the sale of securities). The value test will also allow transactions up to CZK 100,000 to be exempt from tax and thus not be reported in the tax return.

The law is now heading to be signed by the President of the Republic and will enter into force on the day following the date of its publication in the Collection of Laws.

Finally, when preparing the tax return, the taxpayer will need to know exactly at what point in time the income from the sale of the cryptoasset was realized, as the exemption will not be available for income accruing to the taxpayer before the effective date of the Act due to the time test.