The Czech Republic has approved a significant tax reform, eliminating capital gains tax on Bitcoin held for at least three years. The legislation, passed by Parliament on December 6, aims to foster a Bitcoin-friendly environment and encourage long-term investment.

Under the new rules, set to take effect in January 2025, individuals who meet the three-year holding requirement and whose annual Bitcoin income does not exceed CZK 100,000 (approximately $4,300) will benefit from tax exemptions. Income beyond this threshold will remain subject to a flat tax rate of 15%. Notably, the exemption applies only to personal holdings, excluding assets tied to business operations.

Kristian Csepcsar, a prominent Bitcoin advocate, hailed the reforms as transformative, while Pavol Rusnak, co-founder of Trezor, emphasized the nearly unanimous parliamentary support. “This is a clear message that the Czech Republic wants to be at the forefront of crypto innovation,” Rusnak said.

The reforms align with the European Union’s upcoming Markets in Crypto-Assets (MiCA) regulation, harmonizing the Czech Republic’s policies with EU standards to encourage cross-border investment and business development. This early adoption positions the country as a leading destination for Bitcoin businesses and investors.

Businesses also stand to benefit from legal protections against discriminatory practices by banks, ensuring greater financial stability for Bitcoin-related enterprises. However, the legislation leaves some ambiguities, such as verifying ownership duration and the scope of digital assets covered under the exemption.

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