Slovenia Proposes 25% Tax On Crypto Profits

Slovenia’s Finance Ministry has introduced a draft law proposing a 25% tax on profits derived from cryptocurrency transactions. This proposal, unveiled on April 17, is open for public feedback until May 5, 2025, with the intention of coming into effect at the start of 2026 if approved by lawmakers. The tax would apply to instances where cryptocurrency is exchanged for traditional currency or used for purchases, while transactions between different cryptocurrencies and transfers between wallets owned by the same user would remain untaxed.

The Ministry has stipulated that residents must maintain detailed records of their cryptocurrency transactions for inclusion in their annual tax filings. The taxable profit would be calculated by subtracting the initial purchase amount from the value received upon selling the digital asset. Finance Minister Klemen Boštjančič has defended the proposed changes, emphasizing that cryptocurrency transactions should not remain untaxed. He stated, “Right now, one of the most unpredictable financial tools goes untaxed, and that doesn’t make much sense. We’re not doing this for more revenue but for fairness in the system.” The goal is to align cryptocurrency-related earnings with existing tax policies, which currently apply a 10% tax on crypto withdrawals and when digital assets are used for payments. Casual crypto trading remains untaxed unless it is considered part of a business operation. Personal trading, seen as a hobby, is usually not taxed, while mining, staking, and similar business activities already fall under income tax rules.

The proposal has faced criticism from members of the opposition. Jernej Vrtovec, a member of Slovenia’s National Assembly and part of the New Slovenia party, expressed concerns about the potential loss of talent and investment. He noted that Slovenia has the opportunity to become a leader in crypto development but warned that the proposed tax could drive the industry away. Vrtovec emphasized the need for policies that foster innovation and growth rather than setting up barriers. His comments reflect broader concerns about the long-term effects of strict tax measures on the local digital economy.

Despite ongoing policy debates, Slovenia’s cryptocurrency market is experiencing gradual growth. The number of people using crypto in the country is expected to reach around 98,000 by 2025, making up nearly 4.6% of the population. The cryptocurrency market is forecast to generate approximately $2.8 million in revenue by 2025. In mid-2023, Slovenia became the first in the European Union to issue a sovereign bond using blockchain technology, valued at €30 million with a fixed annual rate of 3.65% and structured to mature before the end of that year. A previous attempt to tax crypto gains in 2022, which aimed to introduce a 5% rate on profits above €10,000, did not pass. The current draft law represents a renewed effort by the government to bring digital assets under clear tax regulations.

Slovenia’s proposed 25% tax on cryptocurrency profits has sparked debate and concern among investors, who fear potential talent and capital flight. This move is part of a broader legislative effort to regulate the cryptocurrency market, which has seen rapid growth and increasing adoption. Investors are particularly worried about the impact on the country's burgeoning crypto industry, which has attracted a significant number of startups and talent. The proposed tax could make Slovenia less competitive compared to other European countries with more favorable tax regimes, potentially driving away both investors and skilled professionals. The debate highlights the delicate balance between regulation and innovation in the cryptocurrency space, as governments grapple with how to integrate this new asset class into their existing financial systems. The outcome of this legislative proposal will be closely watched by the global crypto community, as it could set a precedent for how other countries approach cryptocurrency taxation.