In a significant move that reflects the country’s growing support for cryptocurrencies, Slovakia’s National Council of the Slovak Republic has approved a proposal to lower taxes on crypto transactions. The amendment, which was passed on June 28, aims to reduce personal income tax on profits generated from the sale of cryptocurrencies held for at least one year.
Under the new legislation, the tax rate on long-term crypto gains will be reduced to 7%, a substantial decrease compared to the existing sliding scale of 19% or 25%. Furthermore, the amendment includes a provision that exempts payments received in cryptocurrencies up to 2,400 euros ($2,600) from taxation. Additionally, crypto income will be excluded from the health insurance contribution of 14%.
The move is seen as a positive development for the crypto industry in Slovakia, providing a favorable environment for individuals and businesses engaged in cryptocurrency-related activities. The Ministry of Finance estimates that the amendment will have a financial impact of approximately 30 million euros annually.
This latest amendment follows closely on the heels of another significant decision made by the Slovakian parliament. Just a few weeks ago, the parliament passed an amendment to the constitution, guaranteeing citizens the right to use cash as a payment method, a move aimed at preserving the availability of traditional currency in the face of discussions around the potential introduction of a digital euro.
Slovakia, as a member state of the European Union (EU), has been actively monitoring and responding to developments in the crypto industry. In May, the EU signed into law its landmark Markets in Crypto-Assets (MiCA) regulations, which are designed to create a favorable regulatory framework for digital asset activities across the region. MiCA has been commended by industry participants for providing much-needed regulatory clarity, positioning Europe as a hub for crypto-related businesses.
This stands in contrast to the situation in other major markets, most notably the United States, where comprehensive guidelines for the crypto industry have yet to be implemented. Currently under review is the Digital Asset Market Structure bill, proposed by U.S. Republican lawmakers, which could potentially have a significant impact on the industry.
Highlighting the global discussion around crypto regulation, Hester Peirce, a commissioner at the U.S. Securities and Exchange Commission, spoke at the Australian Blockchain Week on June 29. Peirce emphasized the importance of regulators not assuming that “everything is a financial asset” and urged for thoughtful and balanced crypto laws.
Slovakia’s decision to lower crypto taxes and introduce supportive measures demonstrates the country’s proactive stance toward embracing digital currencies. As the crypto industry continues to evolve and gain prominence worldwide, it is crucial for governments to create a regulatory environment that fosters innovation while addressing potential risks.
