INCOME TAX ASPECTS OF CRYPTOCURRENCIES – LEGAL AND YOUNG ECONOMISTS’ VIEW IN THE CZECH REPUBLIC
Filip Hampl
Department of Finance of the Faculty of Economics and Administration, Masaryk University; Lipová 41a, 60200 Brno-Pisárky, Czech Republic
DOI: https://doi.org/10.31410/Balkans.JETSS.2020.3.1.1-10
Filip Hampl
Department of Finance of the Faculty of Economics and Administration, Masaryk University; Lipová 41a, 60200 Brno-Pisárky, Czech Republic
DOI: https://doi.org/10.31410/Balkans.JETSS.2020.3.1.1-10
Balkans Journal of Emerging Trends in Social Sciences, (2020) , Vol 3, No 1
ISSN: 2620-164X
ISSN: 2620-164X
Abstract: Cryptocurrencies are used not only as a payment instrument but also as a speculative and investment instrument. In the context of their use, the question arises of how and whether they should be taxed. The aim of the paper is to analyse and to assess the taxation of income from the cryptocurrency operations from the perspective of a non-business natural person in compliance with the Act on Income Taxes in the Czech Republic, concurrently to find out the attitude of young future economists familiar with cryptocurrencies to this tax issue and to identify socioeconomic factors influencing their attitude. For this purpose, an online questionnaire survey was conducted among economists aged 19-35 years in May 2019. A total of 269 responses were obtained and evaluated using descriptive statistics and ordinal regression. While, according to the effective law, income from all cryptocurrency operations is to be taxed, the results show that most of the respondents (44.98%) would tax the income depending on how cryptocurrencies are used.
Keywords: Personal Income Tax, Act on Income Taxes, Natural Person, Survey, Thing in a Legal Sense, Virtual Currencies.
JEL Classifications E64 · K40
REFERENCES
Act no. 256/2004 Coll., on Capital Market Business, as amended (2004, last amendment 2019). Retrieved
November 18, 2019, from ASPI (legal information system provided by Wolters Kluwer).
Act no. 370/2017 Coll., on Payments, as amended (2017, last amendment 2019). Retrieved November
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18, 2019, from ASPI (legal information system provided by Wolters Kluwer).
Beer, D. (2018). Zdanění virtuálních měn (Taxation of Virtual Currencies). Retrieved November 22,
2019, from https://www.dauc.cz/dokument/?modul=li&cislo=252023.
Act no. 586/1992 Coll., on Income Taxes, as amended (1992, last amendment 2019). Retrieved November
18, 2019, from ASPI (legal information system provided by Wolters Kluwer).
Act no. 6/1993 Coll., on the Czech National Bank, as amended (1993, last amendment 2019). Retrieved
November 15, 2019, from ASPI (legal information system provided by Wolters Kluwer).
Act no. 89/2012 Coll., Civil Code, as amended (2012, last amendment 2018). Retrieved November 18,
2019, from ASPI (legal information system provided by Wolters Kluwer).
Akins, B. W., Chapman, J. L., & Gordon, J. M. (2015). A Whole New World: Income Tax Considerations
of the Bitcoin Economy. Pittsburgh Tax Review, 12(1), 24–56. doi: 10.5195/taxreview.2014.32
Baur, D. G., & Dimpfl, T. (2018). Asymmetric volatility in cryptocurrencies. Economics Letters, 173,
148–151. https://doi.org/10.1016/j.econlet.2018.10.008
Berentsen, A., & Schar, F. (2018). A Short Introduction to the World of Cryptocurrencies. Review,
100(1), 1–19. Retrieved from https://doi.org/10.20955/r.2018.1-16
Blau, B. M. (2017). Price dynamics and speculative trading in bitcoin. Research in International Business
and Finance, 41, 493–499. Retrieved from https://doi.org/10.1016/j.ribaf.2017.05.010
Brauneis, A., & Mestel, R. (2019). Cryptocurrency-portfolios in a mean-variance framework. Finance
Research Letters, 28, 259–264. Retrieved from https://doi.org/10.1016/j.frl.2018.05.008
Ciszewski, P. (2018). Rozliczanie kryptowalut na nowych zasadach. Retrieved November 22, 2019,
from https://www.infakt.pl/blog-ksiegowy/rozliczanie-kryptowalut-na-nowych-zasadach/.
Corbet, S., Meegan, A., Larkin, C., Lucey, B., & Yarovaya, L. (2018). Exploring the dynamic relationships
between cryptocurrencies and other financial assets. Economics Letters, 165, 28–34.
Retrieved from https://doi.org/10.1016/j.econlet.2018.01.004
Delmolino, K., Arnett, M., Kosba, A., Miller, A., & Shi, E. (2016). Step by Step Towards Creating a
Safe Smart Contract: Lessons and Insights from a Cryptocurrency Lab. Financial Cryptography
and Data Security Lecture Notes in Computer Science, 79–94. https://doi.org/10.1007/978-3-
662-53357-4_6
German Act on Income Taxes (Einkommensteuergesetz), as amended (1934, last amendment 2019).
Retrieved November 22, 2019, from https://www.gesetze-im-internet.de/estg/.
Hern, A. (2018). Bitcoin and cryptocurrencies – what digital money really means for our future. Retrieved
November 20, 2019, from https://www.theguardian.com/technology/2018/jan/29/cryptocurrencies-
bitcoin-blockchain-what-they-really-mean-for-our-future.
Khalilov, M. C. K., & Levi, A. (2018). A Survey on Anonymity and Privacy in Bitcoin-Like Digital
Cash Systems. IEEE Communications Surveys & Tutorials, 20(3), 2543–2585. doi: 10.1109/
comst.2018.2818623
Kjærsgaard, L. F., & Arfwidsson, A. (2019). Taxation of Cryptocurrencies from the Danish and Swedish
Perspectives. Intertax, 47(6/7), 620–634. Retrieved from http://www.kluwerlawonline.com/
abstract.php?id=TAXI2019061.
Kumar, A., Fischer, C., Tople, S., & Saxena, P. (2017). A Traceability Analysis of Monero’s Blockchain.
Computer Security – ESORICS 2017 Lecture Notes in Computer Science, 153–173. Retrieved
from https://doi.org/10.1007/978-3-319-66399-9_9
Leinz, K. (2018). A Look at Who Owns Bitcoin (Young Men), and Why (Lack of Trust). Retrieved
November 22, 2019, from https://www.bloomberg.com/news/articles/2018-01-24/a-look-at-whoowns-
bitcoin-young-men-and-why-lack-of-trust.
Miglietti, C., Kubosova, Z., & Skulanova, N. (2019). Bitcoin, Litecoin, and the Euro: an annualized volatility
analysis. Studies in Economics and Finance, ahead-of-print (ahead-of-print). Retrieved
from https://doi.org/10.1108/SEF-02-2019-0050
Mooij, R. de, & Keen, M. (2014). Taxing Principles. Retrieved November 22, 2019, from https://www.
imf.org/external/pubs/ft/fandd/2014/12/basics.htm.
Mrazkova, S. (2018, October 26). Kryptoměny, fondy či vzdělání. Mladí Češi jdou do rizikových investic
(Cryptocurrencies, funds or education. Czech Young People Invest in Risky Instruments).
Retrieved November 22, 2019, from https://perpetuum.cz/2018/06/kryptomeny-fondy-ci-vzdelani-
mladi-cesi-jdou-do-rizikovych-investic/.
Nakamoto, S. (2008). A Peer-to-Peer Electronic Cash System. Retrieved November 22, 2019, from
https://bitcoin.org/en/bitcoin-paper
Polish Act on Income Taxes, as amended (1991, last amendment 2019). Retrieved November 22, 2019,
from http://prawo.sejm.gov.pl/isap.nsf/download.xsp/WDU19910800350/U/D19910350Lj.pdf.
Sabah, N. (2019). Cryptocurrency accepting venues, investor attention, and volatility. Finance Research
Letters, 101339. Retrieved from https://doi.org/10.1016/j.frl.2019.101339
Slovak Act no. 595/2003 Coll., on Income Taxes, as amended (2003, last amendment 2019). Retrieved
November 18, 2019, from ASPI (legal information system provided by Wolters Kluwer).
Szmigiera, M. (2019). Number of Coinbase users monthly 2017-2018. Retrieved November 22, 2019,
from https://www.statista.com/statistics/803531/number-of-coinbase-users/.
Trnkova Kocourkova, H. (2018). Daně a kryptoměny (Taxes and Cryptocurrencies). Bulletin Komory
certifikovaných účetních, 2018(2), 22–23.
Vodicka, M. (2018). Kryptoměna, kryptoaktivum a kryptověc (Cryptocurrency, Cryptoasset and
Cryptothing). Retrieved November 22, 2019, from https://www.dauc.cz/dokument/?modul=li&-
cislo=260629.
Willms, J. (2019). Research: Young Adults Cryptocurrency Revolution „ Bitcoin Magazine. Retrieved
November 22, 2019, from https://bitcoinmagazine.com/articles/new-research-shows-howyoung-
adults-drive-the-cryptocurrency-revolution.
Xu, D. (2018). Free Money, but Not Tax-Free: A Proposal for the Tax Treatment of Cryptocurrency
Hard Forks. Fordham L. Rev, (87), 2693. Retrieved from https://heinonline.org/HOL/Landing-
Page?handle=hein.journals/flr87&div=95&id=&page=.
Zitzmann, F. (2017). Steuerliche Behandlung der Kryptowährungen. Retrieved November 22, 2019,
from https://www.haufe.de/compliance/management-praxis/steuerliche-behandlung-der-kryptowaehrungen_
230130_431018.html.
Keywords: Personal Income Tax, Act on Income Taxes, Natural Person, Survey, Thing in a Legal Sense, Virtual Currencies.
JEL Classifications E64 · K40
REFERENCES
Act no. 256/2004 Coll., on Capital Market Business, as amended (2004, last amendment 2019). Retrieved
November 18, 2019, from ASPI (legal information system provided by Wolters Kluwer).
Act no. 370/2017 Coll., on Payments, as amended (2017, last amendment 2019). Retrieved November
18, 2019, from ASPI (legal information system provided by Wolters Kluwer).
Act no. 563/1991 Coll., on Accounting, as amended (1991, last amendment 2018). Retrieved November
18, 2019, from ASPI (legal information system provided by Wolters Kluwer).
Beer, D. (2018). Zdanění virtuálních měn (Taxation of Virtual Currencies). Retrieved November 22,
2019, from https://www.dauc.cz/dokument/?modul=li&cislo=252023.
Act no. 586/1992 Coll., on Income Taxes, as amended (1992, last amendment 2019). Retrieved November
18, 2019, from ASPI (legal information system provided by Wolters Kluwer).
Act no. 6/1993 Coll., on the Czech National Bank, as amended (1993, last amendment 2019). Retrieved
November 15, 2019, from ASPI (legal information system provided by Wolters Kluwer).
Act no. 89/2012 Coll., Civil Code, as amended (2012, last amendment 2018). Retrieved November 18,
2019, from ASPI (legal information system provided by Wolters Kluwer).
Akins, B. W., Chapman, J. L., & Gordon, J. M. (2015). A Whole New World: Income Tax Considerations
of the Bitcoin Economy. Pittsburgh Tax Review, 12(1), 24–56. doi: 10.5195/taxreview.2014.32
Baur, D. G., & Dimpfl, T. (2018). Asymmetric volatility in cryptocurrencies. Economics Letters, 173,
148–151. https://doi.org/10.1016/j.econlet.2018.10.008
Berentsen, A., & Schar, F. (2018). A Short Introduction to the World of Cryptocurrencies. Review,
100(1), 1–19. Retrieved from https://doi.org/10.20955/r.2018.1-16
Blau, B. M. (2017). Price dynamics and speculative trading in bitcoin. Research in International Business
and Finance, 41, 493–499. Retrieved from https://doi.org/10.1016/j.ribaf.2017.05.010
Brauneis, A., & Mestel, R. (2019). Cryptocurrency-portfolios in a mean-variance framework. Finance
Research Letters, 28, 259–264. Retrieved from https://doi.org/10.1016/j.frl.2018.05.008
Ciszewski, P. (2018). Rozliczanie kryptowalut na nowych zasadach. Retrieved November 22, 2019,
from https://www.infakt.pl/blog-ksiegowy/rozliczanie-kryptowalut-na-nowych-zasadach/.
Corbet, S., Meegan, A., Larkin, C., Lucey, B., & Yarovaya, L. (2018). Exploring the dynamic relationships
between cryptocurrencies and other financial assets. Economics Letters, 165, 28–34.
Retrieved from https://doi.org/10.1016/j.econlet.2018.01.004
Delmolino, K., Arnett, M., Kosba, A., Miller, A., & Shi, E. (2016). Step by Step Towards Creating a
Safe Smart Contract: Lessons and Insights from a Cryptocurrency Lab. Financial Cryptography
and Data Security Lecture Notes in Computer Science, 79–94. https://doi.org/10.1007/978-3-
662-53357-4_6
German Act on Income Taxes (Einkommensteuergesetz), as amended (1934, last amendment 2019).
Retrieved November 22, 2019, from https://www.gesetze-im-internet.de/estg/.
Hern, A. (2018). Bitcoin and cryptocurrencies – what digital money really means for our future. Retrieved
November 20, 2019, from https://www.theguardian.com/technology/2018/jan/29/cryptocurrencies-
bitcoin-blockchain-what-they-really-mean-for-our-future.
Khalilov, M. C. K., & Levi, A. (2018). A Survey on Anonymity and Privacy in Bitcoin-Like Digital
Cash Systems. IEEE Communications Surveys & Tutorials, 20(3), 2543–2585. doi: 10.1109/
comst.2018.2818623
Kjærsgaard, L. F., & Arfwidsson, A. (2019). Taxation of Cryptocurrencies from the Danish and Swedish
Perspectives. Intertax, 47(6/7), 620–634. Retrieved from http://www.kluwerlawonline.com/
abstract.php?id=TAXI2019061.
Kumar, A., Fischer, C., Tople, S., & Saxena, P. (2017). A Traceability Analysis of Monero’s Blockchain.
Computer Security – ESORICS 2017 Lecture Notes in Computer Science, 153–173. Retrieved
from https://doi.org/10.1007/978-3-319-66399-9_9
Leinz, K. (2018). A Look at Who Owns Bitcoin (Young Men), and Why (Lack of Trust). Retrieved
November 22, 2019, from https://www.bloomberg.com/news/articles/2018-01-24/a-look-at-whoowns-
bitcoin-young-men-and-why-lack-of-trust.
Miglietti, C., Kubosova, Z., & Skulanova, N. (2019). Bitcoin, Litecoin, and the Euro: an annualized volatility
analysis. Studies in Economics and Finance, ahead-of-print (ahead-of-print). Retrieved
from https://doi.org/10.1108/SEF-02-2019-0050
Mooij, R. de, & Keen, M. (2014). Taxing Principles. Retrieved November 22, 2019, from https://www.
imf.org/external/pubs/ft/fandd/2014/12/basics.htm.
Mrazkova, S. (2018, October 26). Kryptoměny, fondy či vzdělání. Mladí Češi jdou do rizikových investic
(Cryptocurrencies, funds or education. Czech Young People Invest in Risky Instruments).
Retrieved November 22, 2019, from https://perpetuum.cz/2018/06/kryptomeny-fondy-ci-vzdelani-
mladi-cesi-jdou-do-rizikovych-investic/.
Nakamoto, S. (2008). A Peer-to-Peer Electronic Cash System. Retrieved November 22, 2019, from
https://bitcoin.org/en/bitcoin-paper
Polish Act on Income Taxes, as amended (1991, last amendment 2019). Retrieved November 22, 2019,
from http://prawo.sejm.gov.pl/isap.nsf/download.xsp/WDU19910800350/U/D19910350Lj.pdf.
Sabah, N. (2019). Cryptocurrency accepting venues, investor attention, and volatility. Finance Research
Letters, 101339. Retrieved from https://doi.org/10.1016/j.frl.2019.101339
Slovak Act no. 595/2003 Coll., on Income Taxes, as amended (2003, last amendment 2019). Retrieved
November 18, 2019, from ASPI (legal information system provided by Wolters Kluwer).
Szmigiera, M. (2019). Number of Coinbase users monthly 2017-2018. Retrieved November 22, 2019,
from https://www.statista.com/statistics/803531/number-of-coinbase-users/.
Trnkova Kocourkova, H. (2018). Daně a kryptoměny (Taxes and Cryptocurrencies). Bulletin Komory
certifikovaných účetních, 2018(2), 22–23.
Vodicka, M. (2018). Kryptoměna, kryptoaktivum a kryptověc (Cryptocurrency, Cryptoasset and
Cryptothing). Retrieved November 22, 2019, from https://www.dauc.cz/dokument/?modul=li&-
cislo=260629.
Willms, J. (2019). Research: Young Adults Cryptocurrency Revolution „ Bitcoin Magazine. Retrieved
November 22, 2019, from https://bitcoinmagazine.com/articles/new-research-shows-howyoung-
adults-drive-the-cryptocurrency-revolution.
Xu, D. (2018). Free Money, but Not Tax-Free: A Proposal for the Tax Treatment of Cryptocurrency
Hard Forks. Fordham L. Rev, (87), 2693. Retrieved from https://heinonline.org/HOL/Landing-
Page?handle=hein.journals/flr87&div=95&id=&page=.
Zitzmann, F. (2017). Steuerliche Behandlung der Kryptowährungen. Retrieved November 22, 2019,
from https://www.haufe.de/compliance/management-praxis/steuerliche-behandlung-der-kryptowaehrungen_
230130_431018.html.
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