Slovakia’s parliament, the National Council of the Slovak Republic, has approved an amendment aimed at lowering taxes on cryptocurrencies. The parliamentary vote, held on June 28, marked a turning point for cryptocurrency holders in Slovakia, as the new amendment will significantly reduce the taxation burden on profits derived from the sale of cryptocurrencies held for at least one year.
Under the amended legislation, personal income tax on long-term cryptocurrency profits will be lowered from the existing sliding scale rates of either 19% or 25% to a flat rate of 7%. This substantial decrease is expected to provide a much-needed boost to the crypto sector in Slovakia, attracting more investors and fostering innovation within the industry.
Notably, the amendment also includes a provision that exempts payments received in cryptocurrencies up to 2,400 euros ($2,600) from taxation. This exemption threshold will further encourage the use of cryptocurrencies in everyday transactions and facilitate the mainstream adoption of digital assets.
Moreover, the new legislation will have a positive impact on cryptocurrency holders’ health insurance contributions. The amendment explicitly excludes crypto income from the 14% health insurance contribution, offering additional relief to individuals actively engaged in the cryptocurrency market.
The Ministry of Finance estimates that the amendment will have a financial impact of approximately 30 million euros per year. This reduction in taxes is expected to attract foreign investments, stimulate economic growth, and position Slovakia as an attractive destination for cryptocurrency businesses and entrepreneurs.
Slovakia’s decision to lower cryptocurrency taxes comes at a time when the European Union (EU) is actively monitoring developments in the crypto industry across its member states. The EU has taken proactive steps to regulate digital assets, culminating in the recent enactment of the Markets in Crypto-Assets (MiCA) regulations. These regulations aim to create a favorable regulatory environment for digital asset activity, positioning Europe as a global hub for the crypto industry.
MiCA, introduced in 2020, has garnered praise from companies in the crypto space for providing regulatory clarity and fostering innovation. In contrast, other major markets, such as the United States, are still grappling with comprehensive guidelines for the industry. U.S. lawmakers are currently reviewing the proposed Digital Asset Market Structure bill, which, if enacted, could have a significant impact on the crypto landscape.
On June 29, Hester Peirce, a commissioner at the U.S. Securities and Exchange Commission (SEC), emphasized the importance of not treating everything in the crypto space as a financial asset. Speaking remotely at Australian Blockchain Week, Peirce cautioned regulators against making broad assumptions and highlighted the need for nuanced regulatory approaches to foster innovation while ensuring investor protection.
With Slovakia taking a progressive stance by reducing cryptocurrency taxes and embracing the potential of digital assets, the country is set to attract increased investment and propel its crypto sector forward. The amendment’s positive impact on the economy, combined with the EU’s supportive regulatory framework, positions Slovakia as a promising destination for cryptocurrency businesses, spurring innovation and driving economic growth in the digital age.