Crypto Regulation in Czech Republic

In Czech Republic, a comprehensive set of rules governing cryptocurrency businesses is yet to be developed. Crypto activities aren’t currently distinguished as a separately regulated area and cryptocurrencies aren’t considered a legal tender. Most of the crypto companies engaging in crypto-related economic activities are subject to following general legislation aimed at the Czech financial market. Such a liberal approach allows for innovation and experimentation with the fast evolving products and services as long as all the relevant EU rules are adhered to.

All financial market participants are supervised by the Financial Analytics Office (FAU) for AML/CFT purposes. The authority closely cooperates with the Czech National Bank (CNB) who’s responsible for the general supervision of the financial market in Czech Republic. Other national regulatory authorities are the Czech Inspection Authority and the Ministry of Finance.

The CNB doesn’t consider cryptocurrencies a legal tender and instead classifies them as commodities. The decision is based on the existing legislation which has led to the conclusion that crypto data stored on blockchain doesn’t constitute claims denominated in the traditional national currency issued by a central bank, credit institutions or other payment service providers. According to the Article 4(1) of the Payment System Act, cryptocurrencies aren’t treated as electronic money and pursuant to Article 2(1)(c) of the Payment System Act, they aren’t considered funds either.

Cryptocurrency Licence in Czech Republic

AML/CFT LEGISLATION IN CZECH REPUBLIC

Crypto regulations in Czech republic The most notable legislation relating to crypto companies in the Czech Republic came from the EU. According to the security summary of Internet payments and cryptocurrency, which was published in 2018 by CNB, all such companies operating in the Czech Republic are obliged to adhere to EU legislation.

Although crypto activities in the Czech Republic are largely unregulated, the authorities have ensured transparency as a key operational principle by transposing the fourth EU Anti-Money Laundering Directive (4AMLD)The Fifth Anti-Money Laundering Directive (5AMLD) and the Sixth Anti-Money Laundering Directive (6AMLD), which obliges cryptocurrency exchanges and crypto purse providers to apply strict internal AML/CFT procedures. These directives deal with regular due diligence measures, collection, documentation and storage of information, AML/CFT risk assessment, beneficial ownership, suspicious transaction reporting; Conduct customer transactions and enhance customer due diligence for clients based in high-risk countries.

In fact, national authorities have gone further, covering a wider range of economic activities related to cryptography. This means that AML/CFT applies to those businesses that trade, store, manage or mediate the purchase or sale of virtual currencies or offer other cryptography-related services. In this context, virtual currency is defined as a digital unit that does not fall into the category of fiat money but is still accepted as a means of payment for products and services by persons who are not issuers of the unit.

The following anti-money laundering/terrorist financing laws apply to companies engaged in crypto-related economic activities in the Czech Republic:

  • The AML Act (Act 253/2008 Coll.), which sets out the principles of the AML/CFT
  • Money Laundering Ordinance (Decree No 281/2008 Coll. ), which provides requirements for corporate policies and procedures in the field of combating money laundering/terrorist financing
  • Criminal Code (Law No. 40/2009 Coll.), which defines criminal acts
  • Law on International Sanctions (Law No. 69/2006 Coll. ), which provides the rules for the imposition of international sanctions

To adhere to AML/CFT rules, crypto companies should take the following steps:

  • Development and implementation of internal AML/CFT policies
  • Adopt procedures and adequate measures regarding the PTA
  • Continuously assess risks related to their clients
  • Recruitment of an anti-money-laundering officer and related training
  • Collection and preparation of disclosure of end-benefit owners (DOEs) of companies or institutions initiating transactions
  • Report suspicious transactions and customers
  • Prepare reports as appropriate at the request of the authorities
  • Be prepared to exchange information on cross-border transfers

According to the EU directives and their adaptation in the Czech Republic, each crypto company must collect the following information about its customers in order to correctly apply the KYC procedures:

  • Natural persons – name, number of birth certificate, date and place of birth, address of residence, nationality and in the case of a person with business, name of company, business address and information on corporate identity
  • Company – company name, headquarters address, identification information, including information on beneficiaries
  • Institutions without legal personality – name, identity of administrator or equivalent

Failure to comply with AML/CFT obligations is considered a criminal act and may result in penalties such as termination of business, confiscation of property, fine and publication of judgment. The level of legal measures required is determined after a careful assessment of the nature of the violation and the type of person responsible.

Advantages

Fast project implementation time

Possibility to purchase an off-the-shelf solution

No share capital requirement

No obligatory local staff member

OTHER CRYPTO-RELATED LEGISLATION IN CZECH REPUBLIC

Czech crypto companies should also ensure that they understand where their activities should be placed within the current regulatory framework of the financial market and adhere to the relevant rules. Depending on the nature of the economic activity, the following laws may apply:

  • The Trade Licensing Act (Act No. 455/1991 Coll.)
  • The Act on Banks (Act No. 21/1992 Coll.)
  • The Act on Capital Market Undertakings (Act No. 256/2004 Coll.)
  • The Act on Management Companies and Investment Funds (Act No. 240/2013 Coll.)
  • The Act on Insurance (Act No. 277/2009 Coll.)

The following are some crypto-related economic activities that, with a base in general legislation, depend on the authorization of the NSC, such as:

  • Trading in crypto derivatives, due to the fact that they possess characteristics of investment instruments, requires an investment firm license.
  • Custody of assets of investor funds invested in cryptocurrency, whether such funds are publicly offered or only to a limited group of investors.
  • The transfer of funds within the organization of a deal with cryptocurrencies, for example, within crypto-exchange activity, when a person transfers non-cash money or electronic means, and this transfer has features of provision of payment services, in particular, the transfer of funds from accounts of clients of such exchange to the payment accounts specified by such clients

CRYPTO COMPANY FORMATION IN CZECH REPUBLIC

Crypto Regulation in Szech RepublicTo obtain the license, it is necessary to establish a company in the Czech Republic. The most common form of legal structure of business is the Limited Liability Company (SRO), which can be usually founded within three weeks by one or more shareholders. Its advantages are a very low minimum required share capital, possible exemption from auditing, and fewer rules compared to other legal entities.

Documents required for creating a crypto company:

  • Memorandum of association
  • Business plan along with detailed financial reporting and business continuity business model
  • Documents about the biography of the founders and directors of companies, such as a police record, education, etc.
  • Description of any hardware and software to be used for licensed crypto activities
  • A letter from the bank authorizing the depositing of equity
  • Copy of relevant trading license

All the documentation required should be in the Czech language. In case of any certified translator, we are pleased to assist here at RUE.

Following steps are mandatory for any Crypto Company willing to operate either in or from the Czech Republic:

  1. Registered premises in the Czech Republic for at least one year;
  2. Recruitment of staff in the Czech Republic
  3. Appoint at least one resident or non-resident directors healthy and suitable- relevant educational and professional experience, no criminal record;
  4. Create explicit internal AML/CFT policies to identify and report suspicious activities and customers
  5. Appoint an anti-money-laundering officer capable of being properly trained and prepared for reporting to the relevant authorities;
  6. Establish procedures for exchanging data and protection under national and EU legislation
  7. Policy Development for the Safeguarding of Client Funds

The process of registering a new crypto company includes the following steps:

          • Verification of the name of the new company
          • Opening a corporate bank account
          • Transfer of the minimum share capital, which is only 1 CZK (approx. 04 EUR)
          • Payment of state fees related to registration – 6000 CZK (ca. 243 EUR)
          • Obtaining a compulsory trade licence from the trade licence register
          • Registration of a company in the Business Register
          • Registration with the Social Security Office, selected insurance companies and tax authorities
          • Company registration in the FAA for AML/CFT reporting purposes

          To establish a company remotely, you must sign a power of attorney that will allow your representative to act on your behalf throughout the process of creating your crypto company. If this option suits you best, we will help you.

Crypto regulation in Czech Republic

Period for consideration
up to 1 month Annual fee for supervision No
State fee for application
250 € Local staff member No
Required share capital from 0,04 € Physical office No
Corporate income tax 21% Accounting audit No

HOW TO OBTAIN A CRYPTO LICENSE IN CZECH REPUBLIC

Although the Czech authorities have not developed any complicated process of licensing cryptocurrencies, this does not exempt companies from the obligation to obtain a license before their operations in the Czech Republic.

Presently, most of them are obliged to acquire one of the ordinary trade licences from the Trade Licence Register. Application is fairly easy, and this opens the door to operations in other EU countries, including the opening of branches without having to go through endless bureaucratic procedures if they notify local authorities in accordance with local regulations.

Activities fall into the following categories:

Trade subject to notification may take place immediately upon the notification; authorized trade may take place upon a concession being granted based on a special commercial licence if it serves to meet certain conditions, such as relevant professional experience or education.

Licenses available for crypto companies come in several forms, with the following being some of them:

  • The Classic — Sharing Among Cryptocurrencies for a Fee
  • Fiat — exchange between cryptocurrencies and fiat money on commission
  • Traditional — intermediation services in the exchange of currencies of all types
  • Specialized — specific products and related services with cryptography, like crypto-wallets, encrypted client keys, etc.

By virtue of the principle of possible access, EU/EEA crypto licensees do not need to obtain a Czech licence but can fulfill the requirements by simply notifying the Czech authorities, accompanied by a passport.

The process may take up to four months and also covers the incorporation of a new company. All applicants are subject to the general permitting procedures of the Trade Licence Register.

Applications can be submitted to the central electronic register electronic filing cabinet, signed by the managing director(s) using the secure electronic signature. Applications are handled by the competent Trade Licensing Authority of the applicant’s choice.

The following documents and information are to be submitted along with the application:

  • Corporate documents and detailed information regarding the qualification company
  • Identity documents of founders, directors, and shareholders
  • Certificates confirming no criminal record, unpaid taxes and debts
  • Business plan that includes strategy and operational policies and procedures

All the information supplied is likely to be passed on to the relevant international supervisory authorities to allow their assessment of the applicant’s suitability to engage in licensed crypto activities. Applicants who succeed with their application are granted a licence to undertake activities only as authorized by the Trade Licensing Authority. Where the license granted is conditional, then the licensee can start the crypto activities only upon fulfilling the conditions laid down by the authority.

The law binds all licensees upon request to make reports to any regulatory body, and failures to do so may mean suspension of the licence on grounds of fraudulent activity.

Note that it is criminal to start a licensed crypto activity without permission to do so. A crypto company operating without license may be considered fraudulent, receive fine up to 500 000 CZK (ca. 20 204 EUR) and be forced to stop its activities.

CRYPTO COMPANIES SUPPORT IN CZECH REPUBLIC

Regardless of the fact that the government has very liberal approach to crypto business, Czech crypto startups and maturing companies are given a chance to request support from the government, related and non-governmental initiatives. Startup accelerators and incubators support crypto product development, marketing and sales.

First, the FinTech CNB contact point is at the service of all crypto companies in the Czech Republic, provided they can explain how their product or service fits into the definition of financial innovation. The contact point shall also provide an optimized communication channel in improving the functioning of innovative financial market participants. Qualified companies can obtain regulatory advice by means of a contact form. Nevertheless, this service does not substitute for professional legal advice, so we suggest you approach our team of experts for comprehensive legal advice.

As far as financing and other important business issues are concerned, you can take advantage of the following programs:

  • CzechInvest, a state agency, offers a seven-month CzechStarter incubator program with funding to startups and attendant seminars and expert consulting
  • Blockchain Connect Association/ Czech Alliance, so that this will accelerate the development and promotion of blockchain technology all over the country to get rid of fraud and corruption – that should build confidence in innovative financial solutions.
  • Cryptoanarchy Institute for Promotion of a Decentralized Economy with Unlimited Dissemination of Information and Widespread Introduction of Such Cryptchain-Based Products and Services

TAXES ON CRYPTOCURRENCIES IN CZECH REPUBLIC

They should ensure that crypto companies can effectively conduct their activities within the existing tax system since they are taxed depending on the nature of activities that might fall under different sets of common law. They shall not be treated any different from other enterprises unless certain rules get repealed by EU legislation.

The Czech taxes are collected and collected by the tax authorities. While the tax year is aligned with the calendar year, companies can choose the accounting year as the tax year.

  • Generally, crypto companies are obliged to pay the following taxes:
Tax Type Rate
Corporate Income Tax (CIT) 21%
Branch Tax (BT) 19%
Capital Gains Tax (CGT) 0%-19%
Value Added Tax (VAT) 21%
Social Security Insurance (SSI) 24.8%
Health Insurance (HI) 9%

In its judgment, the Court of Justice of the European Union explained that for VAT purposes, cryptocurrencies like Bitcoin should be regarded as traditional currency and therefore crypto exchange services are exempt from VAT. All other types of crypto products and services have to be registered as a VAT payer. The tax period for newly registered VAT payers is one calendar month.

While resident companies pay taxes on their income around the world, non-resident companies only have to pay taxes on income earned in the Czech Republic. If the company’s headquarters are located in the Czech Republic, then it is a resident taxpayer. Tax residents can protect their tax revenues in two states through approximately 80 international double taxation elimination agreements.

AUDITING REQUIREMENTS

Currently, the general rules of audit apply to crypto companies. The approach to audit depends on the purpose of holding cryptocurrencies, since there is no universal definition, they can be held as financial assets, reserves, or derivatives. Once management of the company has reached a decision on cryptocurrencies classification, they have to be certain this is consistently reflected and disclosed in the financial statements.

Auditing is, under the conditions stipulated by law, obligatory for companies that at the same time meet at least two of the following criteria:

  • Turnover higher than 80 mill. CZK approx. 3,234,413 EUR
  • The total assets higher than 40 mill. CZK approx. 1,617,206 EUR
  • Average number of employees higher than 50

Those companies that have the obligation to file audited financial statements should also file a cash flow statement and a statement of changes in equity. Annual financial statements shall be published in the Business Register and filed with the tax declaration.

If you think that the Czech regulatory framework could help you reach success in this innovative and profitable market, then our experienced and dynamic team RUE will help orient you according to the rules. We are perfectly prepared for advice on company formation, licensing, taxation, and reporting. We provide detailed accounting services tailored to your needs. Efficiency, privacy, and awareness of each detail that could affect the success of your business are guaranteed by every member of our team. Do not hesitate to get in touch with us and schedule an appointment for a consultation.

ESTABLISH A CRYPTO COMPANY IN THE CZECH REPUBLIC

Establish a crypto company in the czech republicSituated almost in the heart of Europe, the Czech Republic was known for its strategic position and its well-developed and open economy, where foreign entrepreneurs enjoyed the same rights as Czech citizens. The process of forming a crypto company is now almost identical to the formation of any other type of business, except for the additional level of compliance related to AML/CFT.

The Czech business environment boasts several advantages:

          • Strong and rapidly growing economy (economy grew by 3.5% in 2021)
          • The Czech Republic is part of the EU, which will allow you to access the EU Single Market
          • Government supports innovative start-ups through investment incentives such as the Entrepreneurship and Innovation Operational Programme
          • A well-educated and skilled but accessible workforce
          • Czech Republic ranked 41st among 190 countries in the World Bank’s Easy of Doing Business 2019 ranking, which indicates a fairly favorable business environment (based on the ease of starting and financing a company as well as engaging in economic activities)

Czech companies are regulated by the Commercial Corporations Act 2012, which covers numerous aspects of the establishment and operation of six types of business entities.

The State Business Register of Czech Companies is maintained by the Registration Court and is administered by the Ministry of Justice in accordance with Law 304/2013.

For AML/CFT purposes, financial market participants are supervised by the Financial Analysis Authority (FAU), which cooperates closely with the Czech National Bank (CNB), which is responsible for the general supervision of the financial market in the Czech Republic. Other national regulatory bodies are the Czech Inspectorate and the Ministry of Finance.

Types of business entities

If you want to start a fully licensed crypto business in the Czech Republic, one of the first things to consider is the appropriate business structure. You can choose from a number of business structures, but the most common are the Limited Liability Company (S.R.O.) and the Joint Stock Company (A.S.).

Regardless of the type of business structure, each crypto company must meet the following requirements:

          • Develop internal AML/CFT policies to ensure customer identification and reporting of fraudulent activities
          • Find and register an office in the Czech Republic
          • Recruitment of full-time staff in the Czech Republic
          • Appoint an anti-money laundering officer to be trained in accordance with the company’s operating model and reporting requirements
          • Develop data protection procedures in accordance with GDPR and other relevant legislation that should ensure secure data exchange with authorities
          • Develop policies and procedures that can ensure the security of client funds
          • All accounting records must be in Czech

Requirements for Directors:

          • The director of the company can be an individual or another company
          • If the director is a natural person from a foreign country, she/he does not need a visa in the Czech Republic to register as a company director
          • Criminal record
          • Full legal capacity
          • No legal impediments that would prevent a person from doing business under trade licensing

Any document required for the establishment of the company must be submitted in the Czech language. If you need a certified translator, our team here in Regulated United Europe (RUE) will be more than happy to help.

Limited Liability Company – S.R.O.

One of the most common forms of legal business structure is the Limited Liability Company-S.R.O. that can be generally established within three weeks. Its advantages include very low minimum share capital, possible exemption from audit, and less regulation than with other legal structures.

Basic characteristics of Limited Liability Company – S.R.O.

  • The company name shall contain “Společnost s Ručením Omezeným”, or its abbreviation Spol. s r.o. or S.R.O.
  • Minimum share capital – 1 CZK (approx. 0,04 EUR) per shareholder
  • A different type of share may have another amount of contribution
  • At least one shareholder who can be a natural person or a legal person and in case of a foreigner, the residence permit is needed
  • The shareholders can have different classes of shares
  • The liability of shareholders is limited up to the amount with which they haven’t paid their contribution obligation considering the records of Business Register at the date in which a creditor demands the satisfaction of his claim
  • At least two resident or non-resident directors, fit and proper: appropriate education and work experience in the financial market; no criminal convictions. :

Documents to be filed for the incorporation of an S.R.O.:

  • Memorandum of Association
  • Business plan, including financial statements and operational structure
  • Identity documents of the shareholders and directors of the company
  • Proof of lack of criminal records for each shareholder and director, issued by a competent authority proving that there are no obstacles to engage in crypto-related economic activities, education diplomas of shareholders and directors.
  • Description of the hardware and software which shall be used to perform licensable crypto activity/ies
  • Bank document allowing depositing of the share capital
  • Copy of relevant trade licence

The Memorandum of Association should include:

          • The company’s trade name
          • The description of the company’s economic activities
          • Details about the shareholders (identification, residential address or registered office address)
          • The types of shares held by each member and specific rights and responsibilities attached to them, when different types of business shares are determined
          • The amounts of contributions pertaining to the business shares, including obligations of each shareholder and relevant deadlines
          • Details of a contribution administrator
          • The amount of authorised capital
          • Number and identification details of the company’s directors and the description of their roles
          • In-kind contributions (description, valuation, amount applied towards the issue price)
          • Details of the person appointed as an expert to evaluate the in-kind contributions

A Limited Liability Company (S.R.O.) is subject to a mandatory statutory audit if at least two of the following amounts are exceeded during both the current and previous year:

          • The net turnover – CZK 80 mill. CZK (approx. 3 mill. EUR)
          • The total assets – 40 mill. CZK (approx. 1,6 mill. EUR)
          • The average number of employees – 50

What You Need to Do

You can either go to the Czech Republic or choose a distance education company, in which case you need to sign a power of attorney that will allow your representative to act on your behalf throughout the process of creating your crypto company. If you decide to do so, contact our legal experts to find out about the next steps.

The formation of a crypto company can take up to four months, which also includes obtaining a trading license.

To create an authorised cryptocurrency company in the Czech Republic, you need to take the following steps:

          • Check and reserve company name
          • Get a legal address for at least one year
          • Preparation and notarization of constituent documents
          • Open a corporate bank account in the Czech Republic
          • Transfer of minimum equity to new bank account
          • Pay state fees related to registration – 6000 CZK (ca. 243 EUR)
          • Registration of a company in the Business Register
          • Apply for a compulsory trade license from the Trade License Registry
          • Register a company with tax authorities
          • Register your company with FAU for AML/CFT reporting purposes

The Czech Republic has not established a reliable regulatory framework for business cryptocurrency. However, each crypto company must obtain a regular trading license from the Trade Licensing Register before starting a business.

Depending on the purpose of using cryptocurrency, the company may apply for any of the following licenses:

          • The Classic – Sharing Among Cryptocurrencies for a Fee
          • Fiat – exchange between cryptocurrencies and fiat money on commission
          • Traditional – currency exchange intermediation of all kinds
          • Specialised – specific products and services related to cryptography (crypto-wallets, encrypted client keys, etc.)

Czech Republic

capital

Capital

population

Population

currency

Currency

gdp

GDP

Prague 10,516,707  CZK $28,095

Taxation of Crypto Companies in the Czech Republic

In the Czech Republic, taxes are collected and administered by the Tax Offices. Although the tax year coincides with the calendar year, companies can opt for an accounting year as their tax year.

Czech Crypto companies are subject to paying the following general taxes:

Tax Type Rate
Corporate Income Tax (CIT) 21%
Branch Tax (BT) 19%
Capital Gains Tax (CGT) 0%-19%
Withholding Tax (WHT) 15%
Value Added Tax (VAT) 21%
Social Security Insurance (SSI) 24.8%
Health Insurance (HI) 9%

Cryptocurrencies are not considered legal tender, so it is recommended to classify them as other inventory. Revenues generated from cryptocurrencies should be recorded as other revenues.

Resident tax companies are obliged to pay taxes on income received in the Czech Republic and abroad. Non-resident companies are obliged to pay taxes only on income received in the Czech Republic. If the company is registered or its headquarters is in the Czech Republic, it is considered a resident taxpayer.

Our team of dedicated and highly qualified lawyers will be happy to provide you with individual, additional support in creating a fully authorized cryptocurrency company in the Czech Republic. From the very beginning of the process you will receive the support of experts on the creation of companies, the rapid development of legislation on AML/CFT and taxation. In addition, we will be more than happy to intervene if you are looking for financial accounting services. Contact us today to get a personalized offer.

Crypto Regulation in the Czech Republic 2024

Cryptocurrency business is legal in the Czech Republic, and its activity falls under the general legislative framework, which includes The Trade Licensing Act, The Act on Capital Market Undertakings, and other laws of the Czech Republic. Still, with new EU regulations in place, it is necessary to turn one’s attention to what will change for all member states in due time.

New EU Rules Applicable to the Czech Republic

The Government of the Czech Republic is obliged to comply with all the regulations drafted by the authorities of the EU, who are working in the direction of improving crypto regulations. The regulation named Markets in Crypto-Assets, abbreviated as MiCA, has been cleared in 2022 and is expected to come into implementation at the end of 2024. This aims to establish legal certainty that will hinder the misuse of cryptoassets and promote the growth of the sector. However, under the current condition, the cases of decentralized finance and non-fungible tokens are excluded.

Environmental Responsibilities

New rules will force major crypto-asset service providers to disclose their energy consumption on their websites and report it to the national authorities.
The European Securities and Markets Authority, ESMA, will adopt more articulated regulatory technical standards necessary.

Regulation of Stablecoins

The stablecoins will fall under the oversight of the European Banking Authority, EBA – the issuers of the stablecoins will be obliged to maintain an adequate liquid reserve at a ratio of 1:1, partially in a form of deposits. This would ensure that the stablecoin holder can at any time and free of charge place a claim against the issuer in value of the asset concerned.

Anti-Money Laundering Checks

MiCA does not replicate AML requirements, but the EBA will maintain a public register and also conduct enhanced AML checks on noncompliant CASPs. CASPs that are not complied with are those whose parent companies are registered in jurisdictions of high risk or non-cooperative on tax issues. The EU intends to standardize the AML regulatory framework by providing one single pan-EU AML authority.

Innovative Projects Support

The DLT Market Infrastructure Regulation-Pilot Regime, or PDMIR, allows one legal system for trading and settling a transaction in cryptoassets qualified as financial instruments under MiFID 2. It allows for the safe testing of new technologies, which will be revisited in 2026.

Crypto-Friendly Environment

The Czech Republic is still friendly to all kinds of cryptocurrency companies, researchers, and enthusiasts. Events such as the European Bitcoin Conference and Conference on Crypto Hardware and Embedded Systems offer opportunities for networking and finding business partners.

You should also note that the support is offered beyond the events by the following local initiatives:

          • CzechStarter – a seven-month incubator programme offered by CzechInvest, a government-backed agency, where startups can break through the Czech market and grow beyond the borders by receiving funding, as well as participating in workshops and receiving advice from experts
          • Technology Incubation project – another CzechInvest’s project, backed by the Ministry for Science, which over the next five years should support up to 250 innovative startups by providing funding of 850 mill. CZK (approx. 35,4 mill. EUR) in seven key areas
          • FinTech contact point by the Czech National Bank (CNB) – a streamlined communication platform with a dedicated contact form, designed to improve the functioning of the innovative financial market startups
          • The Blockchain Connect Association/Czech Alliance – an organisation promoting the development and use of blockchain technology across the country, as well as combating fraud and corruption in the financial industry
          • The Institute of Cryptoanarchy – an organisation that aims to promote the growth of the decentralised economy by focusing on unrestricted dissemination of information and large-scale adoption of blockchain-based products and services

Cryptocurrency Licence in the Czech Republic in 2024

To obtain a Czech cryptocurrency licence in 2024, you still have to apply for a regular trade licence issued by the Trade Licensing Register
This includes filling out the state application form online, which is in Czech, with the name of the crypto company and the founders. After this, the application, supplemented with a state application fee of 6,000 CZK (approximately 240 EUR), goes for consideration to the general Trade Office.

The following types of trade licenses are provided in 2024:

  • Classic-with exchange of cryptocurrencies for a commission
  • Fiat-for exchanging cryptocurrencies and fiat money for commission
  • Traditional-for intermediation in the exchange of currencies of all types
  • Specialised-For specific crypto-related products and services, crypto wallets, encrypted client keys, etc.

The prerequisite for eligibility would be opening a Czech company. Due to its advantages, such as lower minimum share capital, a low number of founders, and exemption from a financial audit, an SRO is a very common legal business structure in the Czech Republic. Just like last year, a crypto company needs to be registered and actually located in the Czech Republic, employ at least employees on a full-time basis and provide at least two fit and proper directors-no obligation for them to be resident in the Czech Republic-an AML Officer. Moreover, the Company shall evidence the adoption of the internal AML/CFT policy; compliance with the data protection legislation; and the measures to provide for clients’ assets safety:.

Cryptocurrency Taxes in the Czech Republic 2024

The Czech Republic has continued to rank high in the International Tax Competitiveness Index, and for the year 2024, no increment in tax rates is expected; hence, it will remain one of the friendly jurisdictions for businesses involved in cryptocurrency. However, you should be aware of the changes initiated by the Organization for Economic Cooperation and Development and applicable to the Czech Republic.

In 2023, the OECD introduced the Crypto-Asset Reporting Framework, CARF, which allowed for automated reporting of taxes and information-sharing about crypto assets across different international tax administrations. The crypto asset reporting framework covers organizations and individuals offering services in crypto exchanges and transfers of crypto, including those that involve retail payments. Crypto assets not used as a means of payment or as an investment, and also those related to centralized stablecoins, are exempt under this framework for the time being.

Recent Changes: One example of the recent national changes is to Social Security and Health Insurance. Beginning in February 2024, employers will pay the lowered rate of 5% for those employees that qualify as members of eligible social groups-for example, persons taking care of a child under ten years old or persons with a disability-and that work part-time. All other tax rates and allowances remain the same.

MiCA Regulations in the Czech Republic

The MiCA Regulation is the first overall EU regulation in cryptoasset markets.

Due to the effectiveness of the MiCA regulation, the cryptoasset sector has moved from a grey, unregulated zone to a well-defined and regulated system.The MiCA Regulation will enter into force on June 30, 2024, and also has a biphasic character: Asset-backed tokens and e-money tokens fall within the scope of the regulations, which enter into force on June 30, 2024, while the rest of the regulation will take effect on December 30, 2024. Crypto service providers who had provided their services in the Czech Republic in accordance with the law applicable until December 30, 2024, may still provide services until July 1, 2026.

Also, lawyers from Regulated United Europe provide legal services for obtaining a Czech Republic crypto license.

Milana

“Hi, I’m happy to guide you on the perfect jurisdiction for your crypto business. The Czech Republic is only starting to regulate this field, and has minimal requirements to fulfil, which is very convenient for early-stage crypto companies.”

Milana

LICENSING SERVICES MANAGER

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FREQUENTLY ASKED QUESTIONS

Cryptocurrency businesses in the Czech Republic are yet to be governed by a comprehensive set of rules. Currently, crypto activities are not regulated separately and cryptocurrencies are not considered legal tender. The Czech financial market regulates most crypto companies engaged in crypto-related economic activities. In such a liberal environment, innovation and experimentation with fast-evolving products and services are allowed, provided that all EU rules are followed.

All financial market participants are overseen by the Financial Analytics Office (FAU) for anti-money laundering and counter-terrorist financing purposes. A close relationship exists between the authority and the Czech National Bank (CNB), which is responsible for overseeing the financial market in the Czech Republic. The Ministry of Finance and the Czech Inspection Authority are also national regulatory authorities.

Tax laws specific to crypto have not yet been introduced in the Czech Republic. Depending on the purpose of crypto-related economic activities, crypto companies are taxed in accordance with EU legislation and general law.
The status of cryptocurrencies as legal tender is not established. As a result, it is categorized as a commodity. In accordance with current legislation, crypto data stored on a blockchain does not constitute claims denominated in the national currency issued by a central bank, credit institution, or another payment service provider.

Obtaining a license requires establishing a company in the Czech Republic. The Limited Liability Company (SRO) is one of the most common legal business structures, which can usually be established within three weeks by one or more shareholders. As opposed to other legal entities, it has fewer rules and requires a very small share capital.
A cryptographic company must have the following documents:

  • Incorporation memorandum
  • A detailed financial plan and a business continuity plan should be included in your business plan
  • Biographical information about founders and directors of companies (criminal records, education, etc.);
  • Cryptographic activities require the use of hardware and software that can be described in detail
  • Deposit authorization from the bank
  • Licence copy for relevant trading

Despite the lack of a complicated licensing process for cryptocurrencies in the Czech Republic, companies are still obligated to acquire a license before they can operate there.
The Trade Licence Register currently requires most of them to obtain one of the normal trade licenses. By notifying local authorities in accordance with local regulations, it is possible to open branches in other EU countries without having to go through endless bureaucratic procedures.
There are several types of activities:

  • Notification-based trade may commence immediately after notification
  • In certain cases (such as if relevant professional experience or education is required) authorized trade can take place after a concession has been granted based on a special commercial licence.

For cryptographic companies, the following license types are available:

  • Sharing cryptocurrencies for a fee - the classic
  • Fiat – exchange between cryptocurrencies and fiat money on commission
  • Traditional - all forms of currency exchange intermediation
  • Cryptography-specific products and services (crypto-wallets, encrypted client keys, etc.)

In the central electronic registry electronic room, applications can be submitted online by managing directors using secure electronic signatures. Each application is handled by the competent Trade Licensing Authority selected by the applicant.
Along with the application, please provide the following information:

  • An overview of the company's qualifications and corporate documents
  • Shareholders, directors, and founders' identity documents
  • A certificate confirming that you do not have a criminal record, debts or taxes owed
  • A business plan that incorporates strategies, policies, and procedures related to operations

The following initiatives can help you with funding and other important aspects of your business:

  • An incubator program offered by CzechInvest offers startups funding, seminars, and expert advice for seven months
  • The Blockchain Connect Association / Czech Alliance was founded to advance blockchain technology in the country, eliminate fraud and corruption, and boost confidence in innovative financial solutions.
  • Creating a Decentralized Economy with Unlimited Information Dissemination and Widespread Implementation of Cryptocurrency-Based Products and Services is the objective of Cryptoanarchy Institute.

Generally, Czech crypto companies are required to pay the following taxes:

  • Corporate Income Tax (CIT) – 19%
  • Branch Tax (BT) – 19%
  • Capital Gains Tax (CGT) – 0%-19%
  • Withholding Tax (WHT) – 15%
  • Value Added Tax (VAT) – 21%
  • Social Security Insurance (SSI) – 24,8%
  • Health Insurance (HI) – 9%

Pilot DLT Market Infrastructure Regulation (PDMIR) was approved by the EU in 2022. Using the pilot, traders and investors will be able to trade and settle transactions in crypto assets, which under MiFID 2 are classified as financial instruments.
As with a sandbox approach, the pilot will provide a safe environment for experimentation with new technologies and gather evidence to support a potential permanent framework. 2026 is the expected review date for the pilot. In the meantime, the European Securities and Markets Authority (ESMA) is consulting on draft guidelines to develop standards and templates for the implementation of DLT, and is currently engaging in Q&A sessions.

Additional information

RUE customer support team

Milana
Milana

“Hi, if you are looking to start your project, or you still have some concerns, you can definitely reach out to me for comprehensive assistance. Contact me and let’s start your business venture.”

Sheyla

“Hello, I’m Sheyla, ready to help with your business ventures in Europe and beyond. Whether in international markets or exploring opportunities abroad, I offer guidance and support. Feel free to contact me!”

Sheyla
Diana
Diana

“Hello, my name is Diana and I specialise in assisting clients in many questions. Contact me and I will be able to provide you efficient support in your request.”

Polina

“Hello, my name is Polina. I will be happy to provide you with the necessary information to launch your project in the chosen jurisdiction – contact me for more information!”

Polina

CONTACT US

At the moment, the main services of our company are legal and compliance solutions for FinTech projects. Our offices are located in Vilnius, Prague, and Warsaw. The legal team can assist with legal analysis, project structuring, and legal regulation.

Company in Czech Republic s.r.o.

Registration number: 08620563
Anno: 21.10.2019
Phone: +420 775 524 175
Email:  [email protected]
Address: Na Perštýně 342/1, Staré Město, 110 00 Prague

Company in Lithuania UAB

Registration number: 304377400
Anno: 30.08.2016
Phone: +370 6949 5456
Email: [email protected]
Address: Lvovo g. 25 – 702, 7th floor, Vilnius,
09320, Lithuania

Company in Poland
Sp. z o.o

Registration number: 38421992700000
Anno: 28.08.2019
Email: [email protected]
Address: Twarda 18, 15th floor, Warsaw, 00-824, Poland

Regulated United
Europe OÜ

Registration number: 14153440
Anno: 16.11.2016
Phone: +372 56 966 260
Email:  [email protected]
Address: Laeva 2, Tallinn, 10111, Estonia

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