In recent news, Slovakia’s National Council, the nation’s legislative assembly, has given its nod to an amendment that will effectively reduce the taxation imposed on cryptocurrencies within the country. In a turn of events that saw the green light on June 28, the personal income tax on earnings made from the sale of cryptocurrencies that have been in the user’s possession for at least a year will significantly diminish to 7%. This heralds quite a departure from the existing taxation paradigm for digital assets, which demands either 19% or 25%.
Interestingly, cryptocurrency payments that do not exceed the sum of 2400 euros will remain untaxed, as per a local Slovakian media outlet. An added break comes in the form of crypto income being exempt from the usual 14% health insurance contribution. The Ministry of Finance reportedly anticipates these alterations to affect an estimated yearly financial impact amounting to approximately €30 million.
This landmark bill was proposed by representatives from two national political parties and Democrats. Moreover, Slovakia, in a significant move earlier this very month, responded affirmatively to amendments in its constitution that ensure the protection of its citizens’ right to pay in cash, acting as a wall of defense against the suggested digital euro.
However, Slovakia, despite being an integral part of the EU, does not have a solid and comprehensive regulatory framework related to crypto, whose development is still in its infancy. With a strong crypto regulatory framework yet to be introduced in the country, it currently falls upon the National Bank of Slovakia, tasked with maintaining a stable monetary policy framework and overseeing the Slovak financial market, to regulate related matters.
In the meantime, crypto businesses have no choice but to comply with the anti-money laundering conditions laid down by the EU. Corporate income tax, applicable to both crypto and non-crypto businesses, currently stands at 21%. That being said, Slovakia is also home to more than 550 Virtual Assets Service Providers (VASPs), which includes crypto exchanges and virtual wallet providers. This impressive density of VASPs suggests that Slovakia is an EU nation where the crypto industry is not just surviving but thriving.
The regulatory framework in Slovakia, however, does posits several aspects that may ring alarm bells. A minor fee permits a VASP to register with a Trade Licensing Office for functioning. It leaves a gap wide open for potential criminal activities. Furthermore, there is a conspicuous lack of scrutiny regarding individuals involved in VASPs, or their experience and knowledge in VASP.
The road ahead for Slovakia could range from overcoming these loopholes and gaining a reputation as a global wealth center to watching how other European nations approach crypto taxes. It’s clear that the crypto landscape is evolving, and Slovakia’s role in it continues to unfold.
Source: Cryptonews
