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Czech Republic: Are Bitcoin Sales Subject to Income Tax?

Are Bitcoin Sales Subject to Income Tax?

Czech Republic
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As a capital gain arising from foreign exchange activities, the sale of bitcoin for Czech currency is not exempt from income tax.

The court argued that bitcoin does not constitute a foreign currency, as it is only a virtual currency, has no equivalent in the form of cash, is not legalised in the territory of any state and is not issued by any central bank. Bitcoin is therefore an intangible movable thing within the meaning of the Income Tax Act.

The nature of the transaction is also relevant. If bitcoin is used to pay for goods and services, the transaction will not be subject to income tax. However, if the bitcoins are not used to pay for goods and services but as an investment instrument, i.e. the transaction consists in the exchange of bitcoin for Czech currency, increasing the seller's assets, such income will be taxed.

(Judgment of the Regional Court Brno of 17 February 2022, Case No. 30 Af 29/2020 – 48)

By Jana Pospisilova, Associate, PONTES 

Czech Republic Knowledge Partner

PRK Partners, one of the leading Central European law firms, has been helping clients achieve their business objectives almost 30 years. Our team of lawyers, based in our Prague, Ostrava, and Bratislava offices, has a unique knowledge of Czech and Slovak law and of the business environment. Our lawyers studied at top law schools in the United States, United Kingdom, Switzerland and elsewhere. They also have experience working for leading international and domestic law firms in a number of jurisdictions. We speak your language, too. Our legal team is fluent in more than 15 languages, including all the key languages of the region.

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