On 31 March 2022, the General Financial Directorate (GFD) published information on the website of the tax administration of the Czech Republic regarding the tax assessment of transactions with cryptocurrencies, which is intended to introduce tax obligations arising from activities related to cryptocurrencies.
The information of the GFD follows the communication of the Ministry of Finance of the Czech Republic on digital currency accounting and reporting dated 15 May 2018 and the opinion of the Czech National Bank on the regulation of the financial market dated 19 November 2018 and provides taxpayers (both individuals and legal entities) with some guidance on the taxation of transactions with cryptocurrencies both in terms of income tax and value added tax.
Read also our article, in which we have already addressed cryptocurrency taxation for individuals.
As the current Czech legislation does not contain any special cryptocurrency regulation, the GFD’s information can serve as basic reference material in the tax assessment of transactions with cryptocurrencies, including mining cryptocurrencies, the purchase and sale of goods/services for cryptocurrency, as well as the exchange of cryptocurrency for fiat currency (i.e. currency with forced circulation created and regulated by official authority such as CZK or EUR).
As the tax administration has access to a range of data and information, increased inspection activity by the Czech tax authorities in the area of cryptocurrencies can be expected. Based on our experience, after release of the above information, it can be expected that the Czech tax authorities will focus more on the taxation of the cryptocurrency transactions both for individual and legal entities.