Cryptocurrencies: How to Handle Them in 2025 and What to Watch Out For

There is still a great deal of ambiguity surrounding cryptocurrency taxation in the Czech Republic. Whether you are a long-term investor or an active trader, it is essential to understand the rules that apply to these digital assets. In this article, we’ll look at how to correctly report and tax cryptocurrency income, the most common mistakes made by investors, and the changes introduced in the 2025 tax year. We will focus on what is expected when filing your tax return and how to avoid issues with the tax authorities. Tax advisor Kateřina Potměšilová provides answers to the key questions.

What are the rules for taxing cryptocurrencies in the Czech Republic? When does the obligation to pay tax arise?

Czech tax legislation still lags behind—or more precisely, struggles to keep up—when it comes to cryptocurrencies. There is a position paper from the Czech National Bank (CNB) from 2014 and a statement issued by the General Financial Directorate (GFŘ) in 2018. There is also a difference in how cryptocurrencies are treated under the Income Tax Act versus the Value Added Tax (VAT) Act.

From the perspective of income tax, both monetary income (e.g. converting crypto to fiat currency) and non-monetary income (e.g. crypto-to-crypto swaps or using crypto to purchase goods and services) are subject to tax. For example, exchanging one cryptocurrency for another, or using crypto to buy a car or pay in an online store that accepts crypto, all qualify as taxable events.

In the case of cryptocurrency mining, income falls under Section 7 of the Income Tax Act (self-employment income), meaning a trade license is required for this activity. On the other hand, simply holding cryptocurrency in a private wallet or on an exchange is not subject to tax.

What are the most common mistakes investors make when it comes to cryptocurrency taxation?

There are quite a few recurring errors. Many clients are not even aware that they are required to report and pay tax on their crypto-related income, and often simply ignore their tax obligations. Even when they realize taxation is necessary, they frequently fail to keep accurate records of all transactions. They may omit transactions from foreign exchanges or wallets, or incorrectly calculate the value of their crypto assets. This leads to errors in completing their income tax return, and they often overlook the benefit of consulting a qualified tax advisor.

How can the tax office find out that I hold cryptocurrencies?

The Tax Authority has several tools for identifying undeclared income. It is already quite effective, for example, in monitoring short-term rentals by using data from platforms like Airbnb or Booking.com.

With cryptocurrencies, due to their nature, detection is more complex and the likelihood of the tax office uncovering undeclared crypto transactions is currently low. However, the situation is evolving. It's also possible for the tax office to be alerted via anonymous tips.

Are there any differences in taxation between long-term holders and active crypto traders?

Yes. If an investor holds a cryptocurrency long-term without making any transactions, there is no tax liability, even if the asset appreciates in value. In contrast, active traders are required to maintain detailed transaction records and report income annually for taxation.

What legislative changes were introduced in 2025 regarding cryptocurrency taxation?

The 2025 tax year brings significant changes to the Income Tax Act in relation to cryptocurrencies. Capital gains exemptions, which currently apply to securities, will now also apply to crypto-assets.

Two major tests will be introduced:

Holding period test: If the cryptocurrency is sold after a holding period of more than three years, the gain will be exempt from tax.
Threshold test: If the total income from crypto sales does not exceed CZK 100,000 per year, it will also be exempt.

However, these exemptions do not apply to crypto-assets held as part of a business property.

Additionally, a CZK 40 million exemption limit will apply. Income from securities and crypto-assets will be combined under this limit, which may be problematic for some investors. The exact interpretation of the law is still unclear, particularly in the absence of transitional provisions, so practical application will need to be monitored.

What’s the best way to keep records for your tax return?

There are various ways to maintain records. Some investors use accounting software, others prefer Excel spreadsheets, or rely on exported statements from crypto wallets. There are also many online portfolio tracking tools. The method depends on what works best for the individual, but the key is to maintain clear and complete records of all transactions.

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About the Author:

Ing. Šárka Pelikánová

Managing Director and Tax Specialist at Connect Economic Group s.r.o.

Šárka is dedicated to improving the financial literacy of entrepreneurs in the Czech Republic through the publication of expert articles and by leading popular seminars such as Accounting and Tax Basics for Entrepreneurs. She founded CEG at the age of 22 and has since focused on its development. Her professional background includes work in Japan as an analyst for an investment fund, alongside completing part of her MBA studies there.

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