Legislators in Slovakia have approved new legislation, by a resounding 112-2 vote in favor, aimed at reducing taxes associated with the sale of crypto or digital assets.
In addition to the aforementioned tax cut law, members of the National Council of the Slovak Republic, the country’s parliament, have approved additional measures affecting cryptocurrency holders.
The National Council of the Slovak Republic has passed the amendment that will result in a reduction of income tax on profits from the sale of cryptocurrencies. This tax reduction specifically applies to individuals who have owned the cryptocurrencies for at least a year.
The recent vote marked the third reading of the bill in the National Council. According to reports, the Ministry of Finance in Slovakia expects the change, once implemented, to have a financial impact of around €30 million per year.
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In an important development, the Slovak parliament recently passed another amendment to the constitution. This amendment specifically codifies the right of citizens to use cash as a recognized means of payment.
This action comes in response to discussions about the possible introduction of a digital euro. The government wants to ensure that citizens retain the freedom to choose their preferred means of payment. Citizens can opt for cash payment after it is implemented in the constitution.
Drastic reduction of crypto tax rates
Under the new legislation, the tax rate on profits from the sale of cryptocurrencies will be reduced to 7%. This is a significant drop from the current sliding tax rates of 19% or 25%.
In addition, the bill includes a provision that exempts payments in cryptocurrencies up to 2,400 euros ($2,600) from tax.
The bill also addresses the issue of health insurance premiums. Specifically, it excludes income from cryptocurrencies being subject to a 14% health insurance contribution.
As a member state of the European Union, Slovakia, like other EU countries, has the freedom to set its own tax rules and policies related to cryptocurrencies.
This autonomy allows Slovakia to set tax rules. And it can formulate rules conducive to promoting the popularity and adoption of cryptocurrencies within its jurisdiction.
Slovakia is one of 27 Member States demonstrating a proactive approach to monitoring the progress of the cryptocurrency industry across the region.
EU takes initiative in drafting directives
The European Union (EU) has recently enacted the Markets in Crypto-Assets (MiCA) regulation. This groundbreaking set of regulations aims to establish Europe as a prominent hub for digital asset activity.
Contrary to the European Union’s proactive approach, other major markets, such as the United States, have not yet implemented comprehensive guidelines for the cryptocurrency industry.
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While the US remains a major player in the crypto space, there is an ongoing debate over potential regulation. However, Republican legislators in the United States have proposed the Digital Asset Market Structure Act, which is currently under review.
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