In some countries, cryptocurrency is a means of payment. In others, it is property. And in others, it is a short-term financial asset. There is no consensus on this yet. In this country, cryptocurrency is not recognized as a financial instrument, and its sale, purchase, or exchange for fiat money is not a financial service. Czech Republic Cryptocurrency regulation is also not considered an investment tool here, so a special license is not required for operations with it. The Ministry of Finance of the Czech Republic recognizes cryptocurrency as an intangible asset, and its exchange for another asset or money does not require a license.
There are many reputable jurisdictions for registering a cryptocurrency business. On a global level, the Czech Republic represents one of the most attractive markets for investment in the cryptocurrency sector. The Czech Republic is one of the first EU countries to introduce regulation of cryptocurrencies and their status within the country. In April 2015, the Governor of the National Bank registered the document “Security of Internet Payments and Cryptocurrency.” Based on this document, EU laws apply to virtual currencies unless restricted by the laws of the Czech Republic.
The Czech Republic remains one of the most cryptocurrency-friendly countries. The system is built on business development, and a progressive approach allows you to respect the interests of all parties: businessmen and government bodies. Investors who want to register a crypto company in the Czech Republic must comply with the requirements of Czech law, which were created to regulate this line of business, and EU directives.
According to the Central Bank’s position, digital money operations are not subject to licensing and payment of additional taxes. But profits made by companies in the form of cryptocurrencies are subject to the usual capital gains tax. In the Czech Republic, cryptocurrencies are equated to a product that is not considered a payment instrument. But suppose a company or an individual makes a profit (incurs a loss) when buying or selling cryptocurrencies. In that case, it is imperative to declare it in your tax reports and pay the appropriate tax.
The Czech Republic has long been striving to take a significant position among other European countries and establish itself as one of the main financial and innovative centers. To do this, the government is introducing innovative financial solutions. The Czech jurisdiction has many advantages. First of all, it is an understandable and transparent tax system without hidden fees. In addition, taxes in the Czech Republic are very loyal to cryptocurrency companies. Another advantage is the location of the country, because it is the very center of Europe. Of course, these are not the only advantages that a crypto company receives after registering its activities. Below are a number of differences from other European jurisdictions:
Before applying for a license, an entrepreneur must register a company in the Czech Republic or establish a local branch. In any case, you need to know the algorithm of actions that will help in the legal registration of your activities. Before you collect documents for company registration, make sure that the crypto organization meets the following parameters:
In the Czech Republic, there is no complete legal framework regulating cryptocurrency companies’ activities. However, the Czech Republic is a European Union member and governed by EU laws and directives. The website of the Czech National Bank has published a summary of the European Union’s “Security of Internet payments and cryptocurrencies.” Cryptocurrencies are not classified as means of payment but are designated as goods. In addition, mining is not prohibited in the Czech Republic, and there are incubator programs for crypto projects. This is a significant incentive for the rapid development of crypto projects. Companies that plan to carry out crypto activities can apply for one of four types of licenses:
In the Czech Republic, there are four types of permits related to working with cryptocurrencies:
The corporate income tax rate in the Czech Republic is 19%. Income tax for individuals and individual entrepreneurs in the Czech Republic is 15% and applies to such types of income: hired labor, entrepreneurship, rental income, and other activities. Revenue from the acquisition of shares, from the gift of real estate, and inheritance is not taxed. All citizens of the country and foreigners who live in the Czech Republic for at least 183 days at intervals or continuously are required to submit an annual declaration.
In the Czech Republic, no current laws adopted at the state level would fully regulate cryptocurrency activities. However, this industry is fully controlled by European Union directives. The critical operating principle lies in the fourth directive on combating money laundering. Under these crypto regulations, every company must apply stringent measures to combat money laundering and the sponsoring of terrorism. All company areas, customers, and documentation are required to undergo rigorous testing. In addition to this directive, crypto companies in the Czech Republic must also be guided by the criminal code and the Law on International Sanctions. The company is registered with the FAA for AML/CFT reporting.
Registration of activities begins with selecting a suitable business structure, regardless of the jurisdiction in which the entrepreneur will register his activities. You can choose from several business structures, but Limited Liability Company (SRO) and Joint Stock Company (AS) are the most common. The two business models differ in scope and requirements. However, there are many rules for both types of companies. First, this concerns a strict policy on money laundering and financing terrorism. We are also talking about a high degree of customer protection and exacting accountability. The director of any company must be competent and have no criminal record.
This is the most common model for a start-up business. This type of registration is characterized by low authorized capital and fast registration. Please note that such companies must have at least one shareholder and two directors. If the shareholder is a foreigner, he must have a residence permit. To register a company, you must submit a business plan, a memorandum of association, and a trade license copy. There are many limits for SROs, for example, net turnover of up to 80 CZK million and total assets of up to 40 CZK million per year.
This business model suits larger companies with colossal share capital and many employees. The minimum authorized capital is at least 2 million CZK. The company must also have one shareholder and at least three statutory bodies: the Supervisory Board, the Board of Directors, and the General Meeting. The list of documents for registration is standard. Limit on net turnover up to CZK 80 million.
Crypto-currency companies are subject to the same reporting rules as other businesses. First, the entire classification of cryptocurrencies and turnovers must be expressed in financial statements. Companies must regularly submit a statement of cash flows, as well as all significant changes in equity. The annual financial report is submitted with the Tax Return and registered in the State Register.
Our team of experts can help you get licensed in many jurisdictions. We provide services for obtaining a crypto license and in the following jurisdictions:
Crypto license Czech Republic
Yes. Despite the lack of regulatory legal assets in the country’s jurisdiction, local companies can carry out cryptocurrency activities guided by EU laws.
Yes. There is no separate tax on cryptocurrencies in the country. However, according to the Czech Tax Code, crypto companies pay income tax at the standard rate.
Yes. According to the directives of the European Union, you can buy, sell and exchange bitcoins.
Senior Partner, Lawyer
Senior Partner, Lawyer