The Czech Republic is one of the most attractive jurisdictions in the EU for cryptocurrency business, as only the Czech National Bank supervises the financial market, including cryptocurrencies. Gofaizen & Sherle provides professional support in remote obtainment of a Czech Republic crypto license from scratch under a guarantee of a turnkey result or offers a ready-made company with an acquired Czech crypto license in less than 2 weeks
Currently, there is no specific crypto licensing regime in the Czech Republic, however provision of services related to cryptocurrencies is considered as licensed trade with obligation to register the company in the Trade Licensing Register administered by Czech Ministry Of Industry And Trade.
The Czech Republic does not imply requirements of opening a corporate account for the company’s incorporation (in the form of LLC) and the minimum share capital requirement is 1 Czech Krone per shareholder.
Czech legal acts also don’t establish separate requirements for incorporation of crypto-related companies. Therefore, Czech crypto company establishment may take from 1 up to 3 weeks and this term allows to pass all stages, including incorporation and obtaining of crypto license at Trade Licensing Register. Despite the absence of the licensing process ordinary for financial institutions supervised by the Czech National Bank (CNB), Czech companies involved in crypto-related activities are considered as obliged entities and have a supervisory authority in the form financial intelligence unit - Financial Analytical Office (FAÚ), which is responsible for control over their duties arising from Czech AML Act.
Request more information about the Czech Crypto License
Obligations of Czech crypto companies include implementation of AML/KYC policies, certain reporting requirements and appointment of an Employee (AML Officer), responsible for fulfillment of compliance-related requirements.
Due to favorable legislation, the Czech Republic is attractive for cryptocurrency and IT activities. In 2018 the Czech Republic opened a specialized blockchain alliance, Blockchain Connect / Czech Alliance, whose main task is developing and implementing technology in the country. The Paralelni Polis Center operates in Prague and is also engaged in the development of crypto technology.
The support and funding of such structures indicate the government's interest in the progress of innovative financial technologies and the maintenance of stability at the state level.
Choose the best package of services for obtaining a crypto activity license in the Czech Republic from scratch or contact us through the feedback form below for a more tailored made solution
Corporate account for business activity + Board member/AML Officer with local residence + entire maintenance
Initial set up
Exhaustive set up of company infrastructure for the start of operational activity
Initial set up
Registration of the Virtual Asset Service Provider under the minimum regulatory requirements
Initial set up
There's no requirements for local substance in the Czech Republic, including the existence of a local office, director or AML Officer and foreign investors have flexible options for company's management
Result: gathering basic information from the client; providing a preliminary package of documents for further execution of the power of attorney (PoA); clarity of project scope and budgets
Result: The company is registered in the desired name; the company is ready for obtaining the crypto license at Czech Trade Licensing Register
Result: The company has obtained a license in the field of crypto-related activities and it is ready for operations
Result: The company is fully operational; the corporate account is open and the organization meets the requirements of the tax authorities (accountant integrated) as well as the supervisory authority as a virtual asset service provider
Czech legislation doesn’t have separate types of licenses for crypto-activities and the license may be obtained in the field of activity No. 81 "provision of services related to a virtual asset" and Czech AML Act defines crypto company as entity, which in the course of its business activity, buys, sells, stores, manages, transfers or mediates the purchase or sale of a virtual asset, provides financial services related to the offer or sales of the virtual asset, or provides other similar services associated with the virtual asset. For this reason Czech crypto license covers the following transaction types:
Required when exchanging cryptocurrency for a fee.
Allows a firm to exchange digital currency for FIAT or vice versa for a fee.
When providing the exchange services of items 1 and 2
Companies introducing wallets for storing cryptocurrency, creating encrypted client keys, as well as storing them.
Czech AML law defines cryptocurrency as electronically storable or transferable unit that is capable of performing a payment, exchange or investment function whether or not it has an issuer with exception of financial instruments (in the meaning of MiFID), electronic money (in the meaning of E-Money Directive) or fiat money (in any form). Therefore, Czech’s virtual currency definition covers all utility tokens, including some stablecoins, but for operation with security tokens additional license may be needed. It's important to note, that some of activities related to crypto assets may require additional licenses (e. g. investment firm license, asset manager or fund manager licenses, etc.), however there’s no restrictions or even requirements to be licensed for companies, which are using crypto for their own purposes, like:
For understanding if some activity requires a crypto license in Czech Republic or another financial license (usually issued by CNB), as well as for qualification of certain cryptocurrency, it is recommended to consult with our lawyers. As for preliminary assessment of crypto-related activities we would also recommend reviewing the following legal acts:
One of the fastest licenses in the EU (2-3 weeks). One week for company incorporation and 1-2 weeks for registering exchange and custody activities within the Trade Licensing Register
Allows to onboard EU customers freely. For non-EU residents EIDAS methods of verification apply in addition to generally accepted KYC measures
No local substance requirements. The company director, AML officer, and HQ could be allocated abroad
No strict qualification requirements for senior management. No due diligence of board members and KYC officer, except a requirement to provide a certificate of non-criminal record
One of the most attractive tax regimes in the EU based on the tax competitiveness index score 5 out of 37 EEA member states
Costs for initial legal setup and legal maintenance. Vary from 1900-7000 EUR depending on the infrastructure component preferences
No share capital requirements. 1 Czech Krone without requirement to open a corporate account
If you are planning to open a Czech cryptocurrency company, it is necessary to study cryptocurrency taxes in the Czech Republic. As in other European countries, taxation is regulated by the state tax authority. According to the generally accepted rules, the tax year must correspond to the calendar year, but the company may define the reporting year as the tax year.
Taxation for a crypto company may vary based on the services provided, but not from the standard regimes of other businesses, provided that the European Union government does not enact special legislation. Example: The CJEU (Court of Justice of the EU) has ruled that when paying value-added tax, cryptocurrency (such as BTC) is treated as traditional, and therefore the exchange services provided are exempt from VAT
Moreover, in 2007, the Czech government introduced an additional obligation for banks: cryptocurrency exchanges and other providers of virtual financial services are required to identify customers. This was aimed at the transparency of cryptocurrency and creating conditions where the use of cryptocurrency by anonymous taxpayers would be difficult for tax evasion.
Cryptocurrency transactions are generally not subject to VAT but can be passed on to cryptocurrency buyers if the government wants to collect tax on the transaction. This happens very rarely, mostly the buyer is exempt from paying this tax.
That said, crypto companies that provide different types of services and products need to get registered as VAT payers.
Czech companies must pay the following tax rates:
In addition, if the company has officially employed employees, it is necessary to pay social insurance, and health insurance, and make contributions to the pension fund Companies that are Czech residents are taxed based on their profits, while non-resident companies are taxed only on profits that have been earned in the Czech Republic. However, if the main office of the company will be located in the Czech Republic, this company gets the status of a resident taxpayer Remember that evading any state-mandated crypto tax payments in the Czech Republic entails liability.
In the course of crypto-relate activity in Czech republic, the following legal acts shall be taken into account:
Czech crypto companies have an obligation to identify clients in case when volume of transaction(s) performed with the client exceeds 1 000 €. It’s applicable for one or more crypto exchange operations during the client’s lifetime (without term). Also, the same obligation exists, if there’s business relationship (long-term contract) is established with the client. It is applicable when VASP opens a crypto wallet for the client or makes an account on the platform.
Client's identification should be performed in the course of a face to face personal meeting with the client. It means real meeting, not video or any other procedure. Nevertheless there's some exceptions for avoiding personal meetings with a client. First exception is to use eIDAS means – it is in use in some EU countries, however there’s no many people outside the EU who have such means. Second option is using Bank ID – a specific solution, developed for the Czech market and used by Czech banks.
If these 2 options are not available, there's also another exception which exceptions for avoiding personal meetings with the client. They require to collect at least 2 documents confirming identity (e.g. passport & ID card or driver’s license), conclude contract in writing and perform 1stpayment in the course of service provided through an account opened on the name of the client in the European Economic Area (EEA) payment institution. It also may create additional issues for clients, who are not residents of EEA: usually it may be problematic to open an account in EEA payment institution for such clients. It’s important to note that verification procedure (incl. making payment through the relevant account) shall be performed before starting other interactions with the client (e.g. opening crypto wallet, performing crypto to crypto exchange, etc.). This approach creates additional issues for VASP, which are not involved in transactions with fiat currencies (e.g. DAOs, DEX, ICO with only crypto funding).
The most common business activities conducted by crypto companies could be divided into directly and indirectly regulated within the Czech regulatory framework applicable to virtual asset service providers.
Directly regulated – prescribed explicitly in the internal legislative act on combating money laundering as:
Indirectly regulated – not indicated in the law directly, but possible to conduct within the framework of VASP activities: