Latest legislation related to virtual currencies in the Slovak Republic

This article includes an overview of the latest legislation related to virtual currencies in the Slovak Republic.

Relevant acts and other legislation 

Methodological Guideline of the Ministry of Finance of the Slovak Republic No. MF/10386/ 2018-721 for the virtual currency taxing procedure 

The Ministry of Finance of the Slovak Republic (hereinafter referred to as “MF SR“) issued pursuant to Section 160 2 of Act no. 563/2009 Coll. on tax administrationn the amendment of some laws, a methodological guideline whose main objective was to ensure a uniform interpretation of the taxation of income in connection with the sale of virtual currency under Act no. 595/2003 Coll. (hereinafter referred to as the “Income Tax Act“) as in the case of virtual currency accounting operations. 

The Slovak legal order uses the term virtual currency. Under this guidance, a virtual currency is defined as a “digital bearer of value that is not issued or guaranteed by a central bank or public authority, nor is it necessarily linked to legal tender, has no legal status of currency or money but is accepted by certain natural or legal persons as a payment instrument and which can be transferred, stored or electronically traded.” (hereinafter referred to as the “virtual currency”

These guidelines concerned the method of taxation of the virtual currency as well as the method of its valuation and accounting. 

Act No. 595/2003 Coll. on Income Tax as amended (hereinafter referred to as the “Income Tax Act”) 

The Income Tax Act contains, in § 2 a definition of basic terms, (a) determines what is meant by the sale of virtual currency: “virtual currency selling is the virtual currency exchange for assets, the exchange of virtual currency for another virtual currency, the exchange of virtual currency for the provision of the service or virtual currency conversion.” 

The definition of virtual currency has been included in the Income Tax Act with effect from 1 October 2018 and the amendment in question has also introduced new provisions governing the taxation of revenue generated by the sale of virtual currency. 

When taxing income from virtual currency, a taxpayer is understood as a non-business person i.e. he person regulated in § 2 let. d) of the Income Tax Act, but also an entrepreneur, i.e. the person regulated in § 17 (1) of the Income Tax Act. 

Virtual currency is within the meaning of Section 8 (1) let. t) included among so-called other income. Income from the sale of virtual currency, which the taxpayer acquires by the way called mining is included within the meaning of § 8 (1) of the Income Tax Act to the Subsidiary Tax Base in the tax period of the realization of the sale of this virtual currency. There are several ways how to get revenue from virtual currency sales. First, by exchanging virtual currency for other virtual currencies exchanging virtual currency for the provision of a service, and exchanging virtual currency for assets. 

The Income Tax Act in Section 17 (3) let. n) and let. o) further determines what is not included in the tax base. This is the income that comes from virtual currency acquired by the so-called mining in the tax period of its utilization. This revenue shall be included in the tax base in the virtual currency sales tax period. Additionally, the amount that represents the difference between the real value of virtual currency and its purchase price is not included in the tax base. 

However, under Section 17 (43) of the Income Tax Act it is considered as part of the tax base from the sale of virtual currency that has been exchanged as income received within the corresponding tax period in which such exchange takes place by using the exchange value of the exchanged virtual currency at realalue at the exchange date. 

The issue of tax expenses in relation to virtual currency is regulated in § 19 (2) let. (v) of the Income Tax Act. As a tax expense, expenditures may be used to the total amount of virtual currency entry prices in the taxable period in which they are sold up to the amount of the revenue from their sales. The concept of entry price is clarified by § 25b of the Income Tax Act. 

The entry price of virtual currency is, on one hand, the acquisition price (on purchase) and the realalue (in the case of exchange of one virtual currency for another).

Act No. 431/2002 Coll. on Accounting as amended (hereinafter referred as to the “Accounting Act”) 

Act No. 213/2018 Coll. on the tax on insurance amended and supplemented also the Act on Accounting with effect from 01.10.2018. The additions concerned the valuation of the virtual currency in the accounting unit of the entity. The amendment to the Accounting Act sets out the obligation to convert virtual currency into euros on the day of the accounting case. The Act on Accounting also regulates the method of valuation of virtual currency the real value. What is considered to be a real alue is regulated by § 25 par. (1) h) of the Act on Accounting: 

1.virtual currency acquired by payment;

2.the virtual currency acquired by mining at the date of exchange for another asset or service;

3.a service and property acquired in exchange for virtual currency except for cash and valuables valued at nominal values;

4.virtual currency acquired in exchange for another virtual currency; 

Under Section 27 (13) of the Act on Accounting the real value of the virtual currency is the market price on the valuation day according to § 24 (1) let. a) determined in a manner set by the accounting entity from the selected public market with a virtual currency. During the accounting period, the entity uses the same method of determining the real value for the given virtual menu.

Opinion of the National Bank of Slovakia dated 19.03.2018 

The National Bank of Slovakia has published its opinion reagarding issuing and trading with virtual currency using cryptographic / encryption operations, cryptoms (eg bitcoin, ethereum, IOTA, ripple), that says: “this activity is not regulated and supervised by the National Bank of Slovakia. Virtual currencies are not national currencies and therefore do not fall under national regulations. European legislation, including the Slovak legal order, do not regulate and exclude activities related to virtual currency. 

An authorization to perform regulated activities, whether foreign exchange license, authorization to provide payment services, issuance of electronic money or other authorization issued by the National Bank of Slovakia, is not related to the issuance and trading of cryptocurrencies even in case of purchase or sale Cryptocurrency for Euro currency or a foreign currency. No entity supervised by the National Bank of Slovakia is authorized to purchase or sell cryptocurrencies for the Euro currencyr foreign currency within the scope of its permitted activity. 

At the same time, we note that virtual currencies have no physical counterparts in the form of a legal tender, and participation in such a virtual currency scheme is at the own risk of the parties (investors). Exchanges or purchases of virtual names represent their own business risk to investors, money is not protected by any tools. There is no legal entitlement to any compensation for any losses caused by such exchanges or purchases. ” (

The Act of the Ministry of Finance of the Slovak Republic laying down the details of the accounting procedures and the accounting framework for those entrepreneurs who carry out the accounting according to the double-entry bookkeeping system of 16.12.2002 (hereinafter referred as to “Accounting Procedures Act”), as amended by the Ministry of Finance of the Slovak Republic Act no. MF / 015328 / 2018-74 of 19.09.2018 

The Ministry’s measure is linked to § 4 (2) of the Act on Accounting. In the provisions of § 17 (10) Accounting Policies we find the principles for the breakdown of assets and their accounting. In the provisions of § 46 (6) Accounting policy measures provides for the content a definition of the different accounting groups.

Measure of the Ministry of Finance of the Slovak Republic no. MF / 27076 / 2007-74 laying down the details of accounting practices and details on the organization, labelling and content of the items of financial statements for single-account bookkeepers who do businesses or are self- employed if they prove their expenditure incurred on Achieving, Ensuring and Maintaining their Income for the purpose of determining the Income Tax Base dated December 13, 2007 (hereinafter referred as to the “Determination of Items”), as amended by the Ministry of Finance Order no. 17/2018 F. s. no. MF / 13414 / 2018-74 of 12.09.2018 

The Ministry’s measure is linked to § 4 par. 2 of the Act on Accounting. 

In the provisions of § 4 (13) The delimitation of items is regulated by the so called cash book. Provision of Section 12 (6) “In the case of a payable acquisition of virtual currency, the acquisition of virtual currency is accounted in the book of short-term financial assets at real value under § 27 (13) of the Act. “

Opinion of the Ministry of Finance of the Slovak Republic 

Regarding to the opinion of the Ministry of Finance of the Slovak Republic, which was sent to us on 10 January 2019 there is currently no legislation that completely specifies the conditions of a cryptocurrency in Slovakia. There is just some specific legislation considering area of ​​taxation and billing of virtual currencies. Otherwise, the “virtual currency” is not directly prohibited in any of the Slovak legal act.

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