Slovakian lawmakers have slashed its income tax for digital assets by over 70% in a bid to promote their usage in the Central European country.
Legislators voted in favor of an amendment that reduces the tax for digital asset traders to 7%. The current tax regime levies income tax at a progressive rate from 19% to 25%. According to local news outlets, the amendment sailed through the National Council—the country’s unicameral parliament—112-2, with 30 legislators abstaining from the vote.
Michal Horváth, the country’s Minister of Finance, believes this exemption will create an extra $33 million annually for digital asset traders.
In a statement on the amendment, the National Council said the aim is to “reduce the tax burden in connection with the sale of virtual currencies, thereby simplifying their use in everyday life.”
Digital asset payments below €2,400 ($2,612) will also be exempted from taxation.
Slovakia has been taxing digital assets for years, with the Ministry of Finance first releasing a guideline for the sector in March 2018. However, the central bank has repeatedly reiterated that digital assets are not legal tender.
With the new tax cuts, the country, with a population of just over five million, could become a digital assets hub for European traders.
A May survey by European digital currency investment firm Greenfield named Lisbon the most favored digital asset destination globally, with New York and Berlin tied for second. Slovakia didn’t feature on the top ten list.
However, Greenfield revealed that Lisbon’s favorable tax laws were among its biggest draws. This attraction has waned this year, with Portugal’s proposed 28% capital gains tax for digital assets held for less than a year. The government has also proposed a 4% tax on digital asset transfers and stamp duty in applicable cases.
With its reduced taxes, Slovakia could tap the companies fleeing Lisbon and other hostile tax jurisdictions.
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