Cryptocurrencies and taxes - how to deal with them?

The year 2025 brought new rules for cryptocurrency taxation and introduced a value and time test for tax exemptions. Make sure you properly record your income from cryptocurrency transactions—such as holding, exchanging, or selling—so you can be certain whether and how you need to pay taxes on them.

Cryptocurrencies are a hot topic and, following their skyrocketing value, also an investment hit. This is evidenced by an estimate from the Czech Cryptocurrency Association, which states that Czechs trade tens of billions of crowns worth of cryptocurrencies annually. This naturally raises a question many people are asking: how are virtual currencies taxed in the Czech Republic?

You Pay Taxes Not Only on Profits from Sales

Taxing cryptocurrencies is not simple, and there are many myths and ambiguities surrounding it. First and foremost, it is essential to know that it is not just the sale that is subject to tax; other transactions also fall under taxable income from cryptocurrencies. You should address the issue of taxes when engaging in the following activities:

• You sell cryptocurrency and transfer the money to your bank account.
• You sell cryptocurrency and leave the proceeds in an app or online wallet.
• You exchange one cryptocurrency for another.
• You use cryptocurrency to pay for goods or services.
• You mine cryptocurrency.

All transactions except mining may be tax-exempt if certain conditions are met, but sometimes you can’t avoid filing a tax return. Let’s take a look at the specific rules.

Tax Exemptions for Cryptocurrencies: When Are You Exempt from Tax?

Example: You bought Bitcoin; its value fluctuates over time, but you do not exchange it for another cryptocurrency or for fiat (legal tender, i.e., money in any currency), so no taxable transaction occurs.

Your income from crypto transactions is therefore tax-exempt if you meet the following criteria:

• Value test – Your income (not profit) from crypto transactions did not exceed CZK 100,000 in the calendar year.
• Time test – you held the cryptocurrency for at least 3 years and only then sold it, exchanged it, or used it to purchase goods.

Transactions are assessed in this manner only after the effective date of the amendment to the Income Tax Act. However, the time test does not start “from scratch”—the entire period during which you have held the cryptocurrency is counted retroactively.

Example: If you sold Bitcoin before February 14, 2025, you must tax the income according to the previous rules without a tax exemption. You do not have to pay tax if you sell it after February 14, 2025, and your crypto income for the entire year 2025 does not exceed CZK 100,000, or if you held it for at least 3 years (regardless of value).

Taxation of Cryptocurrencies: When Do You Have to Pay Tax?

Cryptocurrencies on your tax return. Where do they go?

For all individuals, taxable crypto transactions must be included in the tax return under “other income from transfers for consideration ” pursuant to Section 10 (1)(b) of the Income Tax Act, and related expenses (purchase price, fees, etc.) may be claimed against them.

From the perspective of government authorities, cryptocurrencies are intangible movable property; therefore, they are not recognized as cash, and their purchase and sale are not considered payment services. Trading in cryptocurrencies is also a systematic activity—the management of one’s own assets—and thus does not fall under occasional income up to CZK 50,000.

Starting in 2025, you can apply a time-based or value-based tax exemption to cryptocurrencies. However, a major change effective January 1, 2026, is the separation of rules between cryptocurrencies and securities.

While the annual limit of 40 million CZK for the exemption of income from the sale of securities and shares will be abolished starting in 2026, this limit remains in effect for income from the sale of cryptocurrencies. (Note: if the sale of securities took place in 2025, the 40 million CZK limit still applies to them).

If you are unsure how to proceed, be sure to follow how the tax authorities interpret cryptocurrency taxation in practice and, if necessary, consult a tax advisor.

How does an employee pay taxes on cryptocurrency?

Generally, as an employee, you do not need to file a tax return if you meet these 3 conditions under Section 38g(2) of the Income Tax Act:

• You have signed the “pink” taxpayer declaration.
• Your income comes solely from employment.
• Other income does not exceed CZK 20,000 per year (e.g., from rent, capital assets, or other income, including cryptocurrencies that do not meet the conditions for exemption). Note that this refers to income before deducting expenses, not profit.

If your taxable income outside of employment exceeds CZK 20,000, you are required to file a tax return yourself, and we recommend that you consult with tax specialists.

How are cryptocurrencies taxed for self-employed individuals?

If trading cryptocurrencies is not your business activity (you do not hold crypto as business assets), you can still claim an exemption for this income as a self-employed person using the value or time test.

Do you use any of the flat-rate allowances? If so, proceed as follows:

Currency Conversion and Tax on Cryptocurrency Gains

When trading cryptocurrencies, the positive difference between income and expenses is always subject to tax, in accordance with Section 10(4) of the Income Tax Act. According to Section 10(5) of the Income Tax Act, the expense is the purchase price at which you acquired the cryptocurrency, and related costs, such as exchange fees, may also be claimed.

To convert currencies not listed in the exchange rate table, use a conversion via a third currency. For tax return purposes, for example, you can use the exchange rate for 1 bitcoin (BTC) expressed in the currency of a specific exchange, such as U.S. dollars (USD).

The purchase price can be determined in several ways:

• Weighted average of the cryptocurrency’s purchase prices.
• FIFO, or first in, first out—a method where you first sell the cryptocurrencies you purchased first in the past.

You can offset a loss against the same type of income, i.e., a loss from one Bitcoin transaction against a gain from another. The minimum taxable base is 0 CZK.

And what about the tax rate? In additionto the standard 15% income tax, there is also an increased progressive tax rate of 23%. This applies to individuals whose total annual tax base exceeds the set limit (36 times the average wage). For 2026, this limit is exactly CZK 1,762,812 (in 2025, it was CZK 1,676,052). Only the amount exceeding this threshold is then taxed at the increased rate of 23%.

Not sure how to handle cryptocurrency taxation? Contact us

We hope this article has helped you better understand how to tax cryptocurrencies. If you’re having trouble navigating this topic and are looking for someone to handle your entire tax return for you, don’t hesitate to contact us.