The deputies of Slovakia’s National Council, the country’s legislative body, voted on June 28 to endorse an amendment that will reduce the taxation of cryptocurrencies in the country.
Per the approval, the personal income tax for profits made from the sale of cryptocurrencies, held by the user for at least one year, will be lowered to 7%. The current taxation sliding scale for digital assets is either 19% or 25%.
Additionally, payments in cryptocurrencies up to 2400 euros will not be taxed, a local Slovakian media outlet report, said. The bill also exempts crypto income from the standard 14% health insurance contribution.
The report noted that the country’s Ministry of Finance expects the changes to result in an estimated yearly financial impact of about €30 million.
The bill was submitted by members of two national political parties and Democrats.
Early this month, lawmakers in Slovakia amended its constitution to protect the right of its citizens to pay in cash. The move was introduced as a precautionary measure against the proposed digital euro.
Tax Cut Implies Crypto Boom
Slovakia is one of the EU nations where a robust crypto regulatory framework is yet to be introduced. The National Bank of Slovakia is responsible for maintaining a stable monetary policy framework and supervising participants of the Slovak financial market.
In the absence of country-wide regulations, crypto businesses must adhere to EU anti-money laundering requirements. Crypto and non-crypto businesses in the country pay a corporate income tax rate of 21%.
Slovakia hosts more than 550 Virtual Assets Service Providers (VASPs) that include both crypto exchanges and virtual wallet providers. The intriguing density of VASPs suggests that the EU nation is among the leading crypto jurisdiction in Europe with a booming crypto industry.
However, various elements seem potentially concerning when it comes to reviewing the regulatory framework in Slovakia. For instance, merely paying a small fee, a VASP is registered with a Trade Licensing Office and can start operating. This leaves the door open for criminal activities.
Also, there isn’t actual scrutiny of the individuals involved in VASPs, or their experience and knowledge in VASP. Once these loopholes are addressed, the nation would earn a reputation as a global wealth hub.
On the other hand, many European nations have taken a very unique approach to crypto taxes. Belarus became a tax-free country in 2018, exempting all individuals and businesses from crypto tax until 2023. Croatia is a favorable place for crypto traders, where taxes on crypto capital gains are about 10% depending on the city.
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