On 1 December 2022, the minutes of the meeting of the Coordination Committee with the Chamber of Tax Consultants of the Czech Republic (KDP CR) from 30 November 2022 were published on the website of the Financial Administration, at which contribution 602/30.11.22 concerning the taxation of cryptocurrencies was concluded.

We have already seen that cryptocurrencies and virtual assets are a phenomenon of today not only in the eyes of the financial administration (see our article HERE). Virtual assets also appeared at the meeting of the KDP CR and the Financial Administration for the first time. In their contribution, the submitters dealt primarily with the reporting of the acquisition of virtual assets by individuals, who keep tax records, i.e. individuals who receive cryptocurrencies “entrepreneurially” and at the same time do not keep accounts or apply flat-rate expenses.

This paper essentially confirmed our existing understanding, i.e. that cryptocurrencies are intangible movable assets and are accounted for as inventory (although the state administration newly allows for other accounting options). The General Financial Directorate of the Czech Republic (GFD) agreed with almost all of the submitters’ partial conclusions and confirmed that:

• when virtual assets are acquired as business assets, individuals incur an expense at the time of payment;
• when goods/services are exchanged for virtual assets, there are two transactions affecting the tax base;
• on the disposal of virtual assets from business property to private property, the tax base is increased by the amount applied to their acquisition;
• when virtual assets are exchanged for goods/services (for self-employment purposes), the value of the acquired goods/services (or the price determined according to the legal regulation governing the valuation of assets, as noted by the GFD in its conclusion) is both income and expenditure.

Author: Petr Němec, Michal Hlaváč