Slovakia has been an early adopter of cryptocurrencies since the year 2018. Slovakia has come a long way from cryptocurrencies not having a robust legal framework to passing the bill that will impact the sales of Crypto. Slovakia, being a nation that offers numerous advantages aimed at enhancing the overall happiness of its citizens, has the potential to transform into a long-term crypto haven. With its low costs for establishing companies, a tax system that fosters competition and supports businesses, and an absence of restrictions on foreign ownership and employment, Slovakia possesses the necessary elements to attract cryptocurrency-related activities.
However, the tax on cryptocurrencies was not favorable in the past. This tax regime was regulated as the Finance Minister claimed that trade in cryptocurrencies (which is unregulated and anonymous) involves risks of terrorism and organized crime. Hence, along with the taxation, there were extensive regulations imposed on businesses to acquire the license to trade crypto in Slovakia.
In 2022, the NBS declared a rule that the legislation does not define or regulate cryptographic assets which means there are no impositions on business run by cryptocurrencies.
One year later, on June 28th, 2023, the government of Slovakia approved a lower tax rate on digital assets. The lawmakers in Slovakia voted to decrease the taxes on cryptocurrencies. The new tax rate will be 7%, which is much lower than the current tax rate of 19% or 25%. People will not have to pay taxes on cryptocurrency payments they receive up to €2,400.
In addition to the above-lowered tax rate, the bill excludes cryptocurrency income from health insurance contributions by 14%.
The reason for the lower tax rates is that the minister of finance anticipates a monetary impact from the amendment to be around thirty million euros per year. This anticipation has led to the passing of another bill in the constitution. This bill codifies the citizen’s right to use cash as a payment method considering talks around a digital Euro.
Slovakia has always proactively monitored the developments of the cryptocurrency industry through the years. This makes them one of the twenty-seven member states of European nations to actively participate in the activities of crypto.
On May 31, the EU signed its landmark to regulate the trading of crypto in the market. The Market in Crypto-Assets (MiCA) established a set of regulations to make Europe a hub of Digital Assets. The Market in Crypto-Assets (MiCA) act was first proposed in 2020 and has been praised by many companies.
Regulations of Cryptos in the United States compared to Slovakia
The regulations in Slovakia contrast with the regulations in the United States. In the United States, cryptocurrency sales are only regulated, if the sale constitutes the sale of a security under state or federal law or if the sale is considered a money transmission under state law, making the person a money services business (MSB) under Federal law. Even with this law in place, it is still unclear if this will impact the sales of cryptos in the US or not.
This is because the US laws aim to keep the regulations basic to change them in the future to either restrict or expand on it.
Although there are federal bodies to monitor cryptos better, there is no definite rule on the regulation of cryptos.
Crypto laws differ from country to country. Every country has its own rules and regulation, and it is important to follow them accordingly. However, the new bills passed in Slovakia are proving to be a stepping stone for the nation to universally accept cryptos into the market and regulate them as trading stocks.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
