Slovakia: a tax nod to cryptocurrency holders

Slovak parliamentarians have just passed regulations that are undoubtedly a nod to cryptocurrency owners. Transactions with digital tokens with a total value of up to PLN 2,4 thousand euros will not be subject to any tax, and those who will have cryptocurrencies for more than a year can count on significant relief. These are much friendlier rules for cryptocurrency enthusiasts than, for example, in Poland, where the profit tax on this market is always 19%.

Regulations regarding taxes on cryptocurrency income are just coming into effect. One of them is especially worth paying attention to. It is aimed at hodlers, i.e. people who hold cryptocurrencies, often regardless of the market situation and rapidly changing prices. Often not only for profit, but also - and perhaps above all - to manifest their faith in the future of digital payments.

According to the new regulations, all income earned by Slovak tax residents in the financial year will be taxed at 19% or 25%. But if the crypto-assets will be on their accounts for at least a year, the tax will be much lower and will be only 7%.

EUR 30 million per year – the cost of tax amendments

However, Slovakia is not "cheaper" than all neighboring countries. A rate of 7% for hodlers has already been introduced by Switzerland and Slovenia, which are considered to be one of the most friendly for cryptocurrency investors. The Slovaks do not intend to compete with them, but they have adapted to the leaders who set financial directions in this part of the globe.

Ministry of Finance of Slovakia also calculated the cost of amending the tax act. It will amount to approx. EUR 30 million per year, but it was considered worth investing in it, because future profits may be multiples of this amount. This opinion was shared by almost all representatives of the nation. The law was adopted practically unanimously, because 112 deputies voted "for" and only 2 were against.

Small investors will not pay at all

The deputies also amended the law on small investors. Under it, everyone who will pay with cryptocurrencies up to 2,4 thousand. euros will be completely exempt from income tax. Daily payments with digital assets are therefore entirely exempt from taxation. Regardless of whether we will pay for services, goods, invest or even pay salaries to our employees in this way.

What's more, in Slovakia you can also set up a company dealing with investments in cryptocurrencies and take advantage of the many amenities. One of them is the complete exemption from the payment of health insurance contributions, which in this country amount to 14% of the total income and are a significant burden, especially for sole proprietorships with low turnover and profits.

Slovak MEPs: this is just the beginning

Our southern neighbors also emphasize that the tax changes are only part of the new, friendly regulations that will cover cryptocurrency transactions in their country in the near future. Slovakia wants to be a leader in the region and attract capital from neighboring countries. It seems that the parliamentarians have realized that they can only gain from this - provided that the changes are introduced with a head, instead of hiding behind the fear of the new and entrenching with new restrictions and bans.

Let's add that in Poland we pay 19% income tax for profits in the cryptocurrency industry. And it doesn't matter how long we hold the cryptocurrency, the tax rate doesn't change.