Slovakia has taken a significant step towards creating a more favorable environment for crypto users. This was achieved by passing a new bill reducing the digital asset tax burden. The law is set to take effect on January 1, 2024. It intends to promote the use of cryptocurrencies in the country.
The founder of Mangata Finance, Peter Kris, shared the details of the legislation, highlighting its key provisions. Slovakia has recently made headlines with the passing of a law that introduces substantial changes to the taxation of cryptocurrencies.
Big news from my home country Slovakia!
Slovakia just passed a bill that will lower the tax on crypto from 39% to 7%
The new law outlines that:
– holding crypto after 1 year results only in 7% tax
– crypto to crypto exchange is non taxable
– crypto to stablecoin exchange is… pic.twitter.com/wSWRJpDVPN
— Peter Kris (@uPeterKris) July 2, 2023
Due to going into effect at the beginning of next year, the law has numerous vital elements. One of the most essential parts of the new law is the lower tax rate on cryptocurrencies kept for over a year. The new tax rate will be 7%, a considerable reduction from the former rate of 39%. This move aims to incentivize long-term cryptocurrency investments within the country.
The new legislation also brings clarity to the taxation of cryptocurrency transactions. Exchanging one cryptocurrency for another is now a non-taxable event, removing the tax burden of such transactions. However, the surcharge will still apply when trading cryptocurrencies for stablecoins.
Stablecoins are pegged to traditional fiat currencies, but the tax rate remains unspecified. The law allows tax-free purchases with cryptocurrencies, up to €2400/year, promoting their use in transactions and the economy. This provision encourages the everyday use of digital assets for transactions, further boosting the adoption of cryptocurrencies within Slovakia.
Slovakia’s Crypto Tax Law: Boosting Clarity & Adoption
The new law also provides clear guidelines for the taxation of staking activities. Staking rewards will only be subject to taxation when converted to fiat currency or stablecoins. This provision offers clarity and transparency to individuals engaging in staking, ensuring they understand the tax implications.
The announcement of the new legislation garnered significant attention within the cryptocurrency community. Changpeng Zhao, the CEO of Binance, raised a question regarding tax payments when residents directly use BTC or BNB to pay for goods.
While Peter Kris did not respond to Zhao’s query, it sparked a conversation among crypto enthusiasts. In response to another influencer’s query about his preference between BTC and BNB, Zhao stated that he consistently uses BNB but includes BTC in his discussions as a sign of respect.
Related Reading | Binance Destroys 2.65 Billion Tokens In 11th LUNC Burn
Overall, Slovakia’s decision to ease the tax burden on cryptocurrencies through clear legislation demonstrates the government’s commitment to fostering a crypto-friendly environment. The reduced tax rates, clarification of taxable events, and encouragement of crypto-based transactions aim to stimulate the adoption of digital assets and position Slovakia as a progressive player in the crypto space.