As a capital gain arising from foreign exchange activities, the sale of bitcoin for Czech currency is not exempt from income tax. The court argued that bitcoin does not constitute a foreign currency, as it is only a virtual currency, has no equivalent in the form of cash, is not legalised in the territory of any state and is not issued by any central bank. Bitcoin is therefore an intangible movable thing within the meaning of the Income Tax Act. The nature of the transaction is also relevant. If bitcoin is used to pay for goods and services, the transaction will not be subject to income tax. However, if the bitcoins are not used to pay for goods and services but as an investment instrument, i.e. the transaction consists in the exchange of bitcoin for Czech currency, increasing the seller's assets, such income will be taxed.

(Judgment of the Regional Court Brno of 17 February 2022, Case No. 30 Af 29/2020 – 48)

Author: Jana Pospíšilová