Lawmakers in Slovakia recently voted to confirm legislation to regulate and tax cryptocurrency income at a lower rate. Starting in effect, crypto income on assets held for at least a year will only be taxed at 7% instead of the current rates of 19% or 25%.
The lower rate puts Slovakia on par with other crypto-friendly countries in the region like Slovenia and Switzerland. The Ministry of Finance estimated the financial impact of the amendment at approximately 30 million euros per year.
Lawmakers Introduce Tax Exemptions For Crypto Payments
The country’s Ministry of Finance estimates the budget exceeds the state’s tax and levy revenues by 300 million euros this year. Lawmakers have gone ahead to make tax laws favorable for the crypto industry. However, the amendment includes other changes in investment savings.
Earlier today, the National Council of Slovakia, which is the legislative body of the country, made modifications to the country’s crypto tax legislation. Lawmakers voted 112-2 in support of the revision, and the change went into effect immediately.
According to the amendment, cryptocurrency payments of up to 2,400 euros will be exempted from income tax. This essentially establishes a tax-free threshold for small, everyday crypto payments. Also, the bill excludes crypto income from health insurance tax of 14%.
The total market cap crosses $1.13 trillion | Source: Crypto Total Market Cap on TradingView.com
Implications And Impact: A Win For Adoption In Slovakia
Slovakia is one of the many EU member countries monitoring the development of the crypto industry, but a robust crypto regulatory framework is yet to be introduced.
Lawmakers recognize that the crypto industry is here to stay, and they want to create an environment where it can thrive. With cryptocurrency adoption growing around the world, countries are competing to dominate the blockchain industry. Today, the bill giving regulators the power to supervise crypto and stablecoins in the UK was finalized today after receiving royal assent.
The reduction in the tax rate is intended to assist in attracting more crypto companies and encourage the widespread usage of cryptocurrencies within the country. With many countries in Europe trying to establish themselves as a cryptocurrency hub, similar amendments to crypto tax could also be introduced by other European countries.
Tax policies are one-way governments are trying to gain a competitive edge and attract crypto business. Other countries are expected to follow Slovakia’s lead and lower their crypto tax rates to compete on a global level.