AMENDMENT TO TAX LAW BRINGS LOWER TAX BURDEN ON CRYPTOCURRENCIES

#85Amendment to tax law brings lower tax burden on cryptocurrencies

The National Council of the Slovak Republic approved a proposal of a group of deputies amending Act No. 595/2003 Coll. on Income Tax and amending and supplementing certain acts. The aim of the proposal was to reduce the tax burden in connection with the sale of virtual currencies.

In practice, the proposal is intended to make it significantly easier for ordinary citizens to invest and save, including in the context of long-term investment savings or the emerging pan-European pension savings scheme, the current taxation of income from securities being in considerable conflict with the aim of encouraging forms of voluntary savings for retirement.

The draft law envisaged a tax rate of 7% if the funds are obtained by selling virtual currency after one year from its acquisition, while the income from the sale of virtual currency within one year should be included in the tax base (partial tax base) together with other income. The Securities Act introduces a doubling of the maximum amount of funds that can be invested in a long-term investment savings account in a calendar year. The amendments to the Collective Investment Schemes Act aim to broaden the range of investors who will be able to invest in alternative investment funds and increase the proportion of assets that such funds can hold from qualified investors.

The proposal of a group of MPs also brings an amendment to the Act No.580/2004 Coll. Health Insurance Act, the aim of which is to exempt individuals from the obligation to pay health insurance contributions on income from the sale of virtual currency, if the virtual currency was not part of their business assets, regardless of the so-called time test. The so-called time test, which previously applied only to exchange-traded securities, exempted sales more than one year after purchase from income tax. However, other financial instruments such as cryptocurrencies did not have this advantage. Experts have therefore long called for a change and warned of discrimination.

The proposed provision also increases the maximum amount of money that can be invested in long-term investment savings during a calendar year from the current EUR 3 000 to EUR 6 000. The draft law foresees a negative impact on the public administration budget, positive social impacts; at the same time, it does not foresee any impact on the business environment. This proposal introduces very positive changes that will certainly be appreciated by cryptocurrency traders.