Financial Crime World

Slovenia Eyes Cryptocurrency Crackdown as Tax Regime Looms

Introduction

Ljubljana - In a bid to tap into the lucrative world of cryptocurrency, Slovenian tax authorities are pushing for stricter regulations on virtual currency transactions. The draft bill, introduced in October 2021, aims to tax private investors on their gains from buying and selling digital assets.

Current Taxation Regime

Under current rules, individuals in Slovenia are not taxed on capital gains from the sale or use of cryptocurrencies unless they can be classified as a professional business. However, the tax administration is seeking to expand its revenue stream by introducing a flat rate tax of 10% on all transactions involving virtual currencies.

Definition of Virtual Currency

The proposed legislation defines virtual currency as a digital representation of value that is not issued or guaranteed by a central bank or public authority, and is accepted by natural or legal persons as a means of exchange. This broad definition covers cryptocurrencies such as Bitcoin and Ethereum, as well as other digital assets like tokens and stablecoins.

Taxation Requirements

Taxpayers will be required to pay a flat rate tax of 10% on all exchanges of virtual currency for fiat currency or purchases of goods and services using these digital assets. Transactions worth up to €15,000 per calendar year will be exempt from taxation. The timing of taxation is the day the exchange or purchase takes place.

Alternatively, taxpayers can opt for a profit-based tax rate of 20%. This method calculates the tax liability based on the difference between the sale and purchase prices of the virtual currency.

Impact on Cryptocurrency Transactions

While the new legislation has yet to come into effect, it is expected to change the landscape of cryptocurrency transactions in Slovenia. The current lack of taxation on capital gains may have tempted EU citizens to move to Slovenia to sell their digital assets tax-free. However, once the new regulations take hold, experts predict a surge in sales and exchanges by Slovenian residents.

Key Takeaways

  • Slovenian tax authorities are pushing for stricter regulations on virtual currency transactions
  • A flat rate tax of 10% will be introduced on all transactions involving virtual currencies
  • Transactions worth up to €15,000 per calendar year will be exempt from taxation
  • Taxpayers can opt for a profit-based tax rate of 20%
  • The new legislation is expected to change the landscape of cryptocurrency transactions in Slovenia

Get Expert Advice

The WTS Tax office in Slovenia is available for consultation on this topic. Contact us to learn more about how the new regulations will affect your cryptocurrency transactions.