Cryptocurrency Taxation in Slovakia

Cryptocurrency Taxation in Slovakia

Cryptocurrency Taxation in SlovakiaTax rates applied to personal taxes on cryptocurrency in Slovakia range between 19% – 25%. They apply to specific income thresholds in a country, such as 35,022.31 euros with a lower tax rate and a higher tax rate for income levels above that amount.

As a licensed cryptocurrency business in Slovakia, all crypto profits are considered short-term financial assets rather than cash. At the time of the transaction, prices for crypto assets are noted.
There are various tax implications for businesses working with cryptocurrency, and we can advise you as the best route in relation to your individual ownership, partnership, or corporation.

General provision

The Ministry of Finance of the Slovak Republic (hereinafter referred to as “MF SR”) has been issued in accordance with section 160 2 of Law No. 563/2009 Coll. On tax administration, amendments to some laws – methodological guidance, The main purpose of which is to ensure uniform interpretation of income tax in relation to the sale of virtual currency in accordance with Law No 595/2003 Coll. On taxation. (hereinafter “the Income Tax Act”) as in the case of virtual transactions in currency accounting.

The legal order uses the term virtual currency. The guide defines virtual currency as “a digital medium of value which is not issued or guaranteed by a central bank or public authority, nor is it necessarily linked to a legal tender; it has no legal status as a currency or money, but accepted by certain natural or legal persons as a payment instrument that can be transferred, stored or sold electronically.”

The Income Tax Act contains in 2. a definition of the main terms (a) defines what is meant by the sale of virtual currency: “the sale of virtual currency is a virtual currency exchange for assets, exchange of virtual currency for other virtual currency, exchange of virtual currency for services or virtual currency conversion.”

Law No. 213/2018 Coll. on insurance tax, amended and supplemented also the Law on Accounting from 01.10.2018.

These appendices concerned the valuation of a virtual currency in an enterprise unit. The amendment to the Accounting Act provides for the obligation to convert virtual currency into euros on the day of the case.

The question of tax expenses related to the virtual currency is regulated in the (19(2) years. (v) Income Tax Act. As a tax expense, expenses can be used to determine the total price of the virtual currency during the period in which it is sold, up to the amount of income from its sales.

The concept of the entry price is specified in the Income Tax Act ~ 25b.

The entrance price of the virtual currency is, on the one hand, the purchase price (when buying) and revaluation (in the case of exchange of one virtual currency for another).

The Accounting Act also regulates the method of estimating virtual currency – real value. Paragraph (1) of para. 25 of the Accounting Act governs what is considered to be real value:

  • Virtual currency purchased by payment.
  • Virtual currency purchased as a result of mining on the exchange date for another asset or service.
  • Service and property purchased in exchange for virtual currency, excluding cash and valuables valued at nominal value.
  • Virtual currency purchased in exchange for another virtual currency.

According to section 27(13) of the Accounting Act, the real value of the virtual currency is the market price on the valuation day in accordance with (24(1) years. a) is determined in the order, established by the accounting body of the selected public market using virtual currency. During the reporting period, the subject uses the same method of determining the real value of the virtual menu.

VAT Act

Trading with virtual currencies is considered a financial transaction, and as such is exempt from value added tax in the EU, based on the judgment of the European Court of Justice. Despite the above statement, VAT may be applicable to virtual currencies if they are used to pay for purchased goods and services, since such transactions are subject to VAT as if the euro was used as the transaction currency.

Private person

For private individuals, profits made from cryptocurrencies are taxable. Thus, income from the sale of cryptocurrencies is listed under “other income” in personal income tax return. The taxable minimum can be lowered by corresponding costs, but it has to be noted. It is possible to the level of the income obtained. As for other income, the tax rates applying are either 19% or 25%. Whereas the first applies for a total income lower than 35.022,31€, the latter if the total income is above this.

Our company is a team of experts who will help you open a company and obtain a cryptocurrency license in Slovakia. We provide legal guidance and ensure strong preparation for business and licensing applications, working hand in hand with our clients to help them navigate the administrative side of their business with confidence. The experienced lawyers at Regulated United Europe (RUE) will be happy to familiarise you with all cryptocurrency regulations in Slovakia.

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