Czech President Signs Law Ending Bitcoin Capital Gains Tax on CZK 40 Million

(CZECH REPUBLIC) — Long-term crypto holders with Czech tax exposure may owe less Czech tax starting January 1, 2026, but they still must track, compute, and file correctly to claim the benefit.

Czech President Petr Pavel signed a reform in February 2025 that changed how certain crypto gains are taxed in Czechia beginning tax year 2026 (returns typically filed in 2027). Despite headlines claiming “no” Bitcoin capital gains tax, the rule is not a blanket exemption. It is a conditional exemption for long-term holdings, and it includes a hard annual ceiling.

This guide is for:

• Czech tax residents with crypto sales, swaps, or other disposals in 2026.
• Digital nomads who may become Czech tax residents, or who had Czech residency for part of the year.
• Schengen-based travelers with frequent cross-border moves who need clean residency records.
• Investor visa holders and founders whose crypto activity overlaps with Czech employment, business income, or relocation plans.
• U.S. taxpayers living in or moving through Czechia, who may face both Czech and U.S. reporting in the same year.

The practical point is simple: you still must compute your gains, then apply any exemption that fits, and tax what remains.

1) What changed in 2026 for crypto gains (and why it matters)

The reform signed by the Czech President created a path for tax-free treatment of some crypto capital gains in Czechia, starting January 1, 2026.

Here is what the rule actually does:

• It can exempt long-term crypto gains if you meet the holding-period condition.
• It limits the exemption to an annual cap of CZK 40 million.
• Any gains above the cap remain taxable at standard Czech personal income tax rates.

This matters most for taxpayers with large unrealized gains. If you are sitting on appreciated Bitcoin or other coins, the timing of your sales across 2026 and later years can change your Czech tax bill.

2) Eligibility: holding period, start date, and what still gets taxed

To use the Czech exemption, you must meet a holding-period test. it is designed for investing, not frequent trading.

How the holding period works

• The holding period is measured per asset lot. That means each purchase can have its own clock.
• When you dispose of crypto, you match what you sold to what you bought. Then you test the holding period for that lot.

Do pre-2026 purchases count?

Yes. Coins purchased before January 1, 2026 can qualify once they satisfy the holding period. That can be helpful for people who accumulated years ago and plan to sell in 2026 or later.

What still gets taxed

Even with the new law:

• Short-term disposals remain taxable under standard rules.
• You still must compute gains first, then determine what portion is exempt.
• Gains that do not meet the conditions are treated as taxable income under Czech rules.

A “disposition” generally includes:

• Selling crypto for fiat.
• Swapping one coin for another.
• Using crypto in a way treated as a sale under Czech rules.

Because edge cases vary by fact pattern, treat “disposition” broadly unless your Czech advisor confirms otherwise.

⚠️ Warning: Headlines about “no Bitcoin capital gains tax” often ignore the holding period and the CZK 40 million annual cap. Plan using the statute’s conditions, not social media summaries.

3) How the cap works—and why crypto is treated differently than some other assets

The exemption is limited by an annual ceiling. Conceptually:

1. Compute your total eligible long-term crypto gains for the year.
2. Apply the exemption only up to the cap.
3. Tax any remaining crypto gains above that amount.

For tax year 2026, the cap is CZK 40 million per year. If you realize gains above that amount, the excess is taxable at the regular Czech rates.

Why the comparison to other assets matters

Czech discussions around this reform often compare crypto to securities and shares.

• Some other asset categories may rely mainly on time tests for exemption.
• Under the 2026 structure described in professional analyses, crypto remains capped, even where other categories may be less restricted.

For planning, that means your “sell schedule” can change depending on whether you are disposing of crypto versus other investment assets.

4) De minimis and everyday spending: when reporting may not be required

The reform also introduced a compliance relief concept for small activity.

De minimis rule

If your crypto transactions stay under an annual de minimis threshold, reporting may not be required. For 2026, the stated threshold is CZK 100,000 per year.

Everyday spending treatment

As described in the draft and related guidance summaries, paying for goods and services with crypto is not treated as a taxable event in this framework.

That said, you should still keep records. Small thresholds are easy to exceed if you use multiple wallets or cards.

Keep support such as:

• Receipts showing what you bought and when.
• Wallet addresses and transaction hashes.
• Notes tying a payment to a specific trip, invoice, or merchant.

5) Policy evolution: why the cap exists and what changed going into 2026

To understand why crypto has a special ceiling, it helps to know the short policy arc.

• A broad cap framework was introduced earlier and applied across asset types, including crypto.
• Going into 2026, the system shifted. Some categories moved back toward time-test-based exemptions without the same cap.
• Crypto did not fully follow that path. It kept an annual limit, which is why the CZK 40 million figure is central to planning.

For internationally mobile taxpayers, this difference can affect whether you realize gains in crypto or in other investments during a relocation year.

6) Avoiding misinformation: what the law says (and what headlines get wrong)

The most common misunderstanding is the claim that Czechia “eliminated” crypto taxes. That is not accurate.

To sanity-check any claim about Czech crypto taxes, confirm four items:

1. Effective date: The change applies starting January 1, 2026.
2. Holding period: You need long-term holding to qualify.
3. Annual cap: The exemption is limited to CZK 40 million.
4. Asset category: Crypto may be treated differently than securities or shares.

For higher-stakes cases, rely on the legislation text and written analysis from reputable tax firms. Avoid marketing posts from exchanges or promoters.

7) Filing and planning guide for digital nomads and investors (tax year 2026, filed in 2027)

This section is the filing workflow. Use it whether you are Czech-resident all year or moving in or out during 2026.

Eligibility checklist (quick screen)

U.S. residency rules for immigrants and visa holders are explained in IRS Publication 519 at Pub. 519.

Step-by-step process (Czech computation + U.S. cross-border steps)

Step 1: Confirm your tax residency timeline.
Digital nomads should map days, home base, and ties. Residency drives whether Czech rules apply.

Step 2: Export complete transaction data.
Pull records from each exchange, wallet, and on-chain activity you used in 2026.

Step 3: Identify dispositions and compute gains.
Compute proceeds minus cost basis per lot. Track fees separately when possible.

Step 4: Apply the holding-period test per lot.
Split gains into “eligible long-term” and “non-eligible” buckets.

Step 5: Apply the Czech exemption up to the annual cap.
Exempt eligible gains up to CZK 40 million. The remainder stays taxable.

Step 6: Apply Czech tax rates to taxable amounts.
Czech personal income tax rates referenced in summaries are 15% up to CZK 1,762,812, then 23% above that level.

Step 7: File the right U.S. forms if you are a U.S. tax resident.
For tax year 2026 (filed in 2027), many immigrants and visa holders must report crypto on:

• Form 1040, including the digital asset question.
• Form 8949 and Schedule D for capital gains and losses.
• Potentially Form 1116 for a foreign tax credit if Czech tax was paid.

For IRS background on U.S. crypto reporting, start at virtual currency.

Step 8: Consider foreign reporting if your accounts are held abroad.
If you are a U.S. person and your foreign financial accounts exceed thresholds, you may need:

• FBAR (FinCEN Form 114) if foreign accounts exceed $10,000 aggregate at any point.
• Form 8938 (FATCA) if you meet the applicable threshold.

Crypto held directly in a self-custody wallet is not a “foreign financial account” for FBAR purposes, but exchange accounts can be. Classification can vary with facts.

💡 Tax Tip: If you expect gains above the cap, consider whether splitting sales across tax years is possible. Confirm residency and holding periods first.

U.S. deadlines and extension options (tax year 2026, filed in 2027)

Even if your main activity is in Czechia, U.S. filing deadlines can still apply if you are a U.S. tax resident.

📅 Deadline Alert: For tax year 2026, most U.S. individual returns are due April 15, 2027. U.S. taxpayers abroad often get an automatic June 15, 2027 filing extension.

Czech filing deadlines depend on your situation, filing method, and representation. Confirm local due dates early, especially if you are leaving Schengen and need closure.

Documents you’ll need (crypto + cross-border)

Use this checklist before you start computing gains:

• Exchange CSV exports for all platforms used in 2026.
• Wallet addresses and transaction hashes for on-chain activity.
• Trade confirmations, fee reports, and staking or lending statements.
• Purchase records showing cost basis and acquisition dates.
• CZK conversion rates used, with date stamps and source.
• Travel calendar and residency evidence (leases, visas, registrations).
• Czech payslips or business records if crypto overlaps employment or self-employment.
• If U.S.-connected: prior-year U.S. return, SSN/ITIN records, and any Forms W-2 or 1099.

IRS resources and when to get professional help

Start with IRS international and forms resources:

• IRS international portal: international taxpayers
• Forms and publications: forms and pubs
• Residency rules for immigrants: Publication 519 (linked earlier)

Professional help is worth the cost when any of these are true:

• You have gains near or above CZK 40 million.
• You have mixed residency years, or frequent country switches.
• You used multiple exchanges, bridges, or DeFi protocols.
• You need to align Czech reporting with U.S. Forms 8949, Schedule D, and Form 1116.
• You may have FBAR or FATCA filing duties.

Action items for 2026 planning: (1) inventory lots and holding periods now, (2) project gains against the CZK 40 million cap, and (3) lock down residency documentation before you file in 2027.

⚠️ Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax situations vary based on individual circumstances. Consult a qualified tax professional or CPA for guidance specific to your situation.