Slovakian lawmakers have recently approved legislation aimed at regulating and decreasing the tax rate on cryptocurrency earnings. This move positions Slovakia in line with other crypto-friendly nations, including Slovenia and Switzerland, as it strives to create a favorable environment for digital asset holders.
Lower Tax Rate for Crypto Income Held Long-Term
In an important development, the Slovakian government has passed an amendment on June 28 to decrease the taxation on cryptocurrencies. According to the new law, income derived from crypto assets held for a minimum of one year will now be subject to a reduced tax rate of 7%, which is significantly lower than the standard income tax rate.
Health Tax Exemption and Changes to Investment Savings
Aside from the lowered tax rate, the amendment also introduces several other notable changes. One such change is the exemption of income from cryptocurrencies from health taxes. This move is estimated to have an annual financial impact of around 30 million euros, as reported by the Ministry of Finance. Furthermore, the proposal includes adjustments to investment savings.
Payments in Cryptocurrencies Below 2,400 Euros Exempt from Taxation
Under the proposed changes by Petr Cmorej of SaS, a Slovakian political party, payments made in cryptocurrencies up to 2,400 euros will be exempt from taxation. This exemption encourages the use of digital currencies for smaller transactions and further promotes their adoption within the country.
Doubling the Maximum Limit for Long-Term Investment Savings
Another significant modification brought forth by the amendment is the doubling of the maximum limit for long-term investment savings within a calendar year. Previously set at 3,000 euros, the new limit now stands at 6,000 euros. This adjustment aims to provide increased incentives and opportunities for individuals interested in investing in cryptocurrencies in Slovakia.
A Parallel to Switzerland’s Crypto-Friendly Approach
Comparisons can be drawn between Slovakia’s recent announcement and Switzerland’s historical actions regarding cryptocurrency taxation. Switzerland is known for treating cryptocurrency gains as tax-free capital gains. Consequently, any capital losses resulting from cryptocurrency trading are also not eligible for tax deduction, showcasing the country’s lenient stance on crypto taxation.
According to data from the Financial Mirror, Switzerland has emerged as the European leader in cryptocurrency adoption, securing the top position in the rankings for 2023. With an impressive adoption rate of 21%, the country surpasses its regional counterparts. Furthermore, Switzerland is home to numerous well-known cryptocurrency companies, including Cardano, Polkadot, Solana, Cosmos, and Tezos.
While it is premature to draw a direct comparison, the decrease in tax rate implemented by Slovakia has the potential to encourage further cryptocurrency development and foster higher adoption rates among end-users. However, the full impact of this announcement remains uncertain due to the lack of clear regulations in the field.
