Strategic Cryptocurrency Taxation 2025

The New Tax Reality for Crypto-Assets: How the Rules Changed in 2025 and 2026

This change is part of a broader effort to digitalise capital markets and responds to pan-European regulatory initiatives such as the MiCA and DORA regulations. The exemption of income from crypto-assets for individuals was introduced by Act No. 32/2025 Coll., effective from 15 February 2025. From 1 January 2026, an amendment to the Income Tax Act then narrowed the aggregate limit of CZK 40 million to crypto-assets only. From the same date, the DAC8 Directive applies in the EU, under which data on crypto transactions are to be collected and exchanged between states; in the Czech Republic it is to be implemented by an amendment which, as of 8 October 2026, is awaiting its second reading in the Chamber of Deputies.

Tax Exemption for Individuals: The Value and Holding Period Tests

For small investors and individuals who do not hold crypto-assets as part of their business assets, the new legislation introduces two key tax exemption options.

• Value test: Income from the transfer of crypto-assets for consideration is newly exempt from tax if its total for the calendar year does not exceed CZK 100,000. The key term is gross income, not profit. This means that even in the case of loss-making transactions, the total value of income must be monitored. The exception is electronic money tokens (EMT) within the meaning of the MiCA Regulation, i.e. tokens whose value is pegged to a single official currency (typically euro or dollar stablecoins). Income from their transfer is not counted towards the exempt CZK 100,000. Whether a particular token is an EMT must be assessed on a case-by-case basis. The exemption also does not apply to income from capital assets.

• Holding period test: Income is exempt if more than three years have passed between the acquisition of the crypto-assets and their transfer for consideration. The exemption is subject to a total limit of CZK 40 million per tax period. For 2025, exempt income from the sale of securities and shares was also counted towards the limit; from 1 January 2026, only income from crypto-assets is taken into account. The portion above the limit is taxed proportionately. The holding period test also applies to electronic money tokens. Neither the exchange of a crypto-asset by its issuer for another crypto-asset nor the merger or consolidation of crypto-assets interrupts the holding period test.

The exemption applies only to individuals. Legal entities are not entitled to it at all. An individual who is an entrepreneur cannot claim it for crypto-assets that are or were included in their business assets, until 3 years have passed since the termination of the business activity.

This legislative change seeks to create a "cushion" for the easy legalisation of returns for small investors, reducing their administrative burden. On the other hand, it is a clear signal to larger investors and companies that the state is strengthening its oversight. The fact that the new rules differ for companies reflects the assumption that their activities are systematic and professional.

The aim is to legitimise the market, support the digital economy, and at the same time enforce full transparency for large players who might otherwise use the exemption for tax evasion.

Cryptocurrencies in Corporate Accounting: From Commodity to Mandatory Record-Keeping

Although the new legislation brings changes, under Czech accounting standards, crypto-assets are still treated as inventory or other intangible assets. It is therefore essential to keep detailed records of them and to carry out stocktaking. The accounting treatment differs according to the method of acquisition: by purchase (valued at acquisition cost) or by creation through own activities, such as mining (valued at own costs, such as energy and wages).

Determining the Tax Base: Income vs. Expenses

For legal entities, the subject of tax is the positive difference between income and expenses. All profit from sales is subject to tax. The acquisition cost of the crypto-asset and other related costs, such as exchange fees, can be claimed as a tax-deductible expense. For a legal entity, both income and costs from crypto-assets enter into the overall profit or loss. For individuals who hold crypto-assets outside of their business, by contrast, expenses exceeding income of the given type are not taken into account, so the loss cannot be carried over to other income or to subsequent years.

To determine the purchase price in a partial sale, it is necessary to use methods such as FIFO (first-in, first-out) or the weighted average method. The FIFO method is often more tax-optimal as it allows for the sale of earlier purchased (and usually cheaper) coins, thus reducing the tax base.

Without precise records, a company would have to tax the entire income, not just the profit. The Tax Authority may disallow unsubstantiated expenses and assess additional tax on the entire income, leading to a significantly higher tax liability. Therefore, thorough documentation and professional legal advice are essential for proper tax optimisation.

Because the lawyers at ARROWS regularly deal with this issue and have experience with it, they can prepare internal guidelines and documentation for you that will protect your company from fines and penalties.

Many entrepreneurs mistakenly believe that crypto-asset transactions remain anonymous and beyond the oversight of state authorities. However, this myth is very dangerous. While the blockchain itself is public but anonymous, the gateways to the traditional financial world (such as cryptocurrency exchanges) are subject to strict AML and KYC (Know Your Customer) obligations. These entities collect and share data about their clients, and the Tax Authority has increasingly sophisticated tools for tracing transactions and checking tax compliance. In addition, the automatic exchange of information under the DAC8 Directive will apply, for the first time for the year 2026 (see below).

Income Tax, VAT, and Other Fees: When and What Is Payable?

For legal entities, income from trading crypto-assets is part of the tax base and is subject to the corporate income tax (CIT) rate, which has been 21% since 2024. For a natural person for whom trading in crypto-assets is a systematic business activity, it constitutes income from self-employment, on which social and health insurance contributions are payable in addition to the tax.

Value Added Tax (VAT)

The exchange of a cryptocurrency for a fiat currency or another cryptocurrency is itself considered a financial activity that is exempt from VAT, with no right to deduct. However, this does not end all VAT obligations. The nature of the activity must be carefully assessed, as some related services, such as pool mining, may be subject to VAT.

This fact may give rise to an obligation to register for VAT, even if the supply itself is exempt. Companies must also be wary of the risk of being held liable for VAT if the supplier has not paid the tax. Our lawyers specialise in legal advice on VAT and are ready to help you meet your obligations to avoid penalties.

Thanks to the ARROWS International network and our daily experience with international elements, we know that tax regulations vary significantly across jurisdictions. For example, in Germany, profits of individuals from the sale of crypto-assets can be tax-exempt after just one year of holding. However, in 2026 the German government announced that it would change the taxation of crypto-assets, so the current position must always be verified. These differences create opportunities for legal tax optimisation through a well-chosen international structure.

Regulation and Compliance: Key Obligations for Entrepreneurs

Since 15 February 2025, it has no longer been possible to provide crypto-asset services to clients on the basis of a trade licence. The law abolished the unregulated trade in field no. 81 ("services related to virtual assets") and excluded these activities from trade licensing. Crypto-asset services under the MiCA Regulation, such as operating a trading platform, exchange or custody for clients, require authorisation from the Czech National Bank as a crypto-asset service provider (CASP), or authorisation from another EU Member State. The transitional period for existing providers ended on 1 July 2026. Other services related to virtual assets that are not subject to authorisation under another regulation require authorisation from the Financial Analytical Office. For cryptocurrency mining, an unregulated trade licence in field no. 56 (Provision of software, consultancy in the field of information technology...) is used in practice.

Underestimating this obligation is a major risk. Anyone who systematically provides services related to virtual assets without authorisation commits an administrative offence under the AML Act, punishable by a fine of up to CZK 5,000,000 or up to twice the amount of the unlawful benefit. In extreme cases, there is also a risk of criminal prosecution. In addition, providers of these services are obliged persons under the AML Act and must comply with a number of strict obligations.

Key obligations include:

• Client identification and due diligence (KYC): Verifying identity and determining the origin of assets.

• Screening for Politically Exposed Persons (PEPs): Determining whether a client holds a significant political office.

• Reporting suspicious transactions: The obligation to notify the Financial Analytical Unit (FAÚ) of transactions that show signs of money laundering.

Failure to comply with these obligations can result in extremely high penalties for companies: for a serious, repeated or systematic breach of client identification and due diligence obligations, a fine of up to CZK 30 million or twice the unjustified benefit, for financial institutions up to CZK 130 million or up to 10% of annual turnover, and serious damage to their reputation. These strict AML and compliance requirements are not just an administrative burden, but are becoming a key risk factor and, at the same time, a kind of licence fee for entering the legitimate crypto business. The absence of quality legal advice to help implement the right internal processes exposes the company to an almost unbearable risk.

Our lawyers have extensive experience with AML legislation. We can provide expert training for your employees and management to help you avoid fines that can reach tens to hundreds of millions of Czech crowns. Get a tailor-made legal solution, write to consultation@arws.cz.

DAC8: Collection of Data on Crypto Transactions from 2026

From 1 January 2026, Council Directive (EU) 2023/2226, known as DAC8, applies throughout the EU. Under it, crypto-asset service providers are to collect data on their clients (name, address, state of tax residence, tax identification number and, for natural persons, date and place of birth) and aggregate data on their purchases, sales, exchanges and transfers. They pass this data on to the tax administrator, which automatically exchanges it with the other EU states within nine months of the end of the calendar year.

For the Czech Republic, this means that data is being collected for 2026. According to the Financial Administration and the draft amendment to the Act on International Cooperation in Tax Administration, providers will file their first report with the Specialised Tax Office by 30 April 2027. However, the Czech transposition has not yet been adopted: as of 8 October 2026, the government bill (Chamber of Deputies Print No. 98) is awaiting its second reading in the Chamber of Deputies. The deadlines and details may therefore still change.

In practical terms, this means the following for investors and companies:

• The Financial Administration will see transactions on European platforms. It is worth checking whether your tax returns for previous years correspond to reality. Tax that you declare yourself in an additional tax return is not subject to the 20% penalty that applies when tax is additionally assessed at the initiative of the tax administrator; you will, however, pay default interest.

• Records of purchases and acquisitions are essential. The data from the provider shows transactions, but it does not prove your acquisition price or that the three-year time test has been met. You must prove that yourself.

• Beware of the obligation to report exempt income. Exempt income exceeding CZK 5 million, for example from crypto-assets held for more than 3 years, must be reported to the tax office by the deadline for filing the tax return.

Do you want to be sure that your crypto transactions will stand up to comparison with DAC8 data? The lawyers at the ARROWS law firm will review your records, assess the exemption and, if necessary, prepare an additional tax return. Write to konzultace@arws.cz.

Why is the Role of a Legal Advisor Key? Turn Challenges into Opportunities

The new legislation for the taxation and regulation of crypto-assets brings significant changes for both entrepreneurs and investors. As our analysis shows, this is a complex issue that includes not only taxes, but also accounting, VAT, authorisation to provide crypto-asset services, the exchange of tax information, and strict AML obligations. Navigating these regulations is key to minimising risks and effectively managing your digital assets. Ignoring these obligations can lead to high fines, additional tax assessments, or even criminal prosecution.

The lawyers at the ARROWS law firm regularly deal with this issue and have practical experience with it. Our portfolio includes more than 150 joint-stock companies, 250 limited liability companies, and 51 municipalities and regions, which attests to our deep understanding of both the corporate and public sectors. We pride ourselves on speed and high quality to find tailor-made solutions for you. Thanks to our ARROWS International network, which we have been building for ten years, we can also provide you with comprehensive services with an international element.

Our clients include investors and companies with global ambitions, and we are therefore happy to connect clients who have interesting investment or business opportunities. And we are also happy to listen to interesting entrepreneurial or business ideas. Don't be caught off guard by the new rules and turn legislative challenges into a competitive advantage.