- The Slovakian Parliament has passed a bill to lower taxes on income derived from cryptocurrencies, reducing the personal income tax on crypto profits from 19% or 25% to 7%.
- Payments received in cryptocurrencies up to 2,400 euros will not be taxed, and cryptocurrency income will be exempt from a 14% health insurance contribution.
- Slovakia estimates an annual loss of around 30 million euros due to the tax cuts, while other European countries like the UK are making regulatory strides in the crypto market.
Slovakian lawmakers recently approved legislation to regulate and tax cryptocurrency income at a lower rate. Crypto income on assets held for at least a year will be taxed at 7% rather than the current rates of 19% or 25%.
Thanks to the lower rate, Slovakia is now on par with other crypto-friendly countries in the region, such as Slovenia and Switzerland. The Ministry of Finance estimated that the amendment would cost around 30 million euros annually.
Legislators Propose Tax Breaks for Cryptocurrency Payments
According to the country’s Ministry of Finance, the budget will exceed the state’s tax and levy revenues by 300 million euros this year. Lawmakers have made tax laws more favorable to the cryptocurrency industry. The amendment, however, includes other changes in investment savings.
The National Council of Slovakia, the country’s legislative body, amended the country’s crypto tax legislation earlier today. A vote of 112-2 approved the revision, which went into effect immediately.
According to the amendment, cryptocurrency payments of up to 2,400 euros will be exempt from income tax. This effectively creates a tax-free threshold for small, everyday cryptocurrency payments. Furthermore, the bill exempts cryptocurrency income from the 14% health insurance tax.
Adoption Gains Implications and Impact on the Slovak Republic
Slovakia is one of many EU member countries keeping an eye on the crypto industry’s development, but a solid crypto regulatory framework has yet to be implemented.
Legislators recognize that the cryptocurrency industry is here to stay and want to foster an environment where it can thrive. Countries are competing to dominate the blockchain industry as cryptocurrency adoption grows worldwide. On Thursday, after receiving royal assent, the bill granting regulators the authority to supervise crypto and stablecoins in the UK was finalized.
The lower tax rate is intended to attract more crypto companies and encourage the widespread use of cryptocurrencies in the country. With Many European countries attempting to establish themselves as other European countries may introduce cryptocurrency hubs, other European countries may introduce similar crypto tax amendments.
Tax policies are one way for governments to gain a competitive advantage and attract crypto business. Other countries are expected to follow Slovakia’s lead and lower their crypto tax rates to compete globally.
