Crypto-funded debit card in Czech Republic

VASP Activities (Virtual Assets Only): For services exclusively involving virtual assets (e.g., crypto-to-crypto exchange, crypto custody), the Czech Republic requires registration as a trade license (živnostenské oprávnění) under the Trade Licensing Act, specifically for "Provision of services related to virtual assets." This is generally considered a "free trade" (volná živnost).

Act No. 253/2008 Coll., on Certain Measures Against Legalisation of Proceeds of Crime and Financing of Terrorism (the "AML Act"): This is the primary national law transposing the EU AML directives. It was amended to include VASPs as obliged entities.

Identification of the Customer:

Natural Persons: Full name, date and place of birth, permanent address, nationality.

Legal Entities: Company name, registered office address, identification number (IČO), and details of their statutory representatives.

Beneficial Owner (BO): For legal entities and trusts, VASPs must identify and verify the beneficial owner(s) – i.e., the natural person(s) who ultimately own or control the customer, or on whose behalf a transaction is being conducted. This typically involves identifying any natural person holding more than 25% of the shares or voting rights, or otherwise exercising control.

Verification of Identity:

Information must be verified using reliable, independent sources (e.g., valid government-issued identification documents for individuals like passports or ID cards; official company registration documents for legal entities).

For non-face-to-face relationships, enhanced verification measures are required.

Understanding the Purpose and Intended Nature of the Business Relationship:

VASPs must continuously monitor the business relationship and transactions to ensure they are consistent with their knowledge of the customer, their business, and risk profile, including, where necessary, the source of funds.

Enhanced Due Diligence (EDD):

Source of Funds/Wealth (When Applicable):

While the Fifth Anti-Money Laundering Directive (EU 2018/843) (5AMLD) initially brought virtual asset service providers under AML/CFT scope in Czechia, the framework has evolved with newer EU regulations (e.g., MiCA, Travel Rule, upcoming AMLR/AMLD legislation by 2025) now also being relevant and superseding aspects of previous directives.

The legal framework for money laundering harmonization in Czechia is now governed by Directive (EU) 2024/1640, which replaced the earlier Sixth Anti-Money Laundering Directive (EU 2018/1673).

Virtual Asset Exchange Services, defined as providing services for the exchange between virtual assets and fiat currencies or between one or more forms of virtual assets, are no longer subject to minimal regulation but now require specific licenses and adherence to the comprehensive EU MiCA Regulation in Czechia.

Regulator Name: Czech National Bank (ČNB).

Regulator Name: Financial Analytical Office (FAÚ) of the Ministry of Finance.

Legal Basis: Act No. 253/2008 Coll., on Selected Measures Against Legitimisation of Proceeds of Crime and Financing of Terrorism (AML Act).

A taxable event occurs when cryptocurrency is sold or swapped for fiat currency, other cryptocurrencies, goods, or services. Simply buying or holding cryptocurrencies is generally not considered a taxable event.

Goods and services in Czechia are sold for Czech Koruna (CZK), which is the national currency and legal tender. While foreign currencies like EUR and USD have exchange rates, they are not legal tender for general sales in Czechia.

Holding Period Exemption (Important Limitation): Unlike other movable assets (like real estate or certain securities), the general holding period exemption for movable property (which is typically 3 years for securities) does NOT apply to cryptocurrencies. All gains from crypto sales/exchanges are potentially taxable regardless of how long they were held.

Act No. 455/1991 Coll., the Trade Licensing Act, was amended effective April 1, 2025, and further amendments will take effect July 1, 2025, affecting the regulatory framework for virtual asset service providers under Czech AML law.