Slovakia is one of the first few countries across the globe to have regulated the asset class that is cryptocurrencies. A while ago, they started taxing the capital gains from crypto assets. The decision has gotten mixed reviews from the crypto community in the country and throughout the globe.
“We perceive virtual currencies as having two roles now: one as a means of exchange and the other, as an investment asset.” These are the words of Slovakia’s Finance Minister who has been tackling the issues faced with the crypto tax in Slovakia. He added, “We are really interested in solving the issues related to taxation of the income stemming from its exchange for goods, as well as of the income stemming from trading such a cryptocurrency.”
But what exactly are the crypto laws announced in the country? Let’s find out about crypto tax in Slovakia in this article!
Tax Laws for Individuals
Just like any other part of the income gained from investing into different asset classes, according to crypto tax in Slovakia, individuals have to pay taxes on crypto gains as well. They have to file the income tax return for the cryptocurrency profits under the ‘other income’ section.
According to the laws set forth by the government in Slovakia, you will need to file the income tax returns including the crypto gains every year including all the costs as well. This means that you can get exemption from the taxes to be paid on the crypto gains if you can show that the costs you incur over the year reduce your net income to less than the tax bracket. The tax to be paid on all the incomes mentioned under ‘other income’ is either 19 per cent or 25 per cent. You will need to pay 19 per cent tax on other income if your total income falls under 35,022.31 Euros. If the income crosses this mark, then the tax to be paid over ‘other income’ is 25 percent.
Crypto Tax in Slovakia for Businesses
Source / The crypto law in Slovakia
According to the crypto law in Slovakia, businesses that are running under the administration of the Slovakian government have to pay considerable taxes on all crypto gains. The government has made it clear that gains from mining or trading in crypto will be treated as financial assets of the enterprise. The business accounts will be managed by filing the gains from cryptocurrency under short term financial assets. Therefore, businesses cannot file the crypto losses under tax slabs and carry it forward to get exemption.
The assets once traded at the market value will be included in the taxation by the government. Even for the mined cryptocurrencies, the tax will not be levied upon the businesses or even the individuals until it has been traded. This means that crypto funds themselves are not liable for taxation, only the gains made by trading them are to be considered in the tax scheme.
The government is facing major backlash over such high taxation laws over crypto gains majorly because of no exemptions given to individuals or even the enterprises. All the companies and entrepreneurs who provide services of crypto exchanges or even trading, have to register with the government. Act No. 279/2020 Coll. Amending Act No. 297/2008 (the prevention of legalization of profits derived from criminal activities and prevention of terrorism financing) provides a strict guideline to all such businesses about the procedures to be followed. The license for all such activities will be provided to you only if the minimum share capital of the company is 5000 Euros and has a director with EU or Slovakian citizenship with proper business plans.
What Does The Government Have To Say?
While announcing the crypto tax in Slovakia laws and other regulations over virtual currencies, the government released a methodological guideline. This guideline was meant to clarify the situation of taxation of the crypto gains. The finance minister of the country stated back then that the taxation was necessary over the virtual currency. This was to protect the economy from money laundering and also to make sure that the crypto gains were managed properly.
But according to the finance experts, the move in 2018 was solely a preliminary solution to the financial blunder that the country faced in 2017. The finance minister had also urged other countries to conjure up regulations over crypto gains and to form an international regulatory commission for cryptocurrency. Currently, there has not been much progress in that domain, even though countries like the UK, India and even the USA have announced their crypto regulations plans. Crypto laws in Slovakia made the country one of the firsts to regulate virtual currencies across the globe.
Conclusion
Crypto tax in Slovakia turned out to be both good and bad news for the crypto community in the country. While it provides a strong recognition to these virtual assets, it also compromises on their integral values, such as the anonymity and control of one’s finances associated with digital currencies. We do hope this post gives you a solid idea of what crypto tax in Slovakia is like.