The Ministry of Finance of Slovenia has revealed a draft proposal to impose a 25% tax on profits from crypto assets. If this proposal is passed, there will be a significant shift in the central European country’s crypto taxation policy. The Ministry of Finance hopes to close all existing loopholes and align crypto taxation with traditional investment ventures.

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Slovenia’s Stance on Crypto Profits

At the moment, Slovenia does not tax individuals on profits from crypto trading, unless it is part of a business activity. Only businesses are taxed on their crypto capital gains. Due to leniency towards individual traders, the country has become a popular destination for crypto investors who wish to receive favorable tax treatment.

However, if the proposed law is passed, profits from converting crypto to fiat will be subject to a flat 25% tax. The same tax percentage will be imposed on all goods and services purchased with cryptocurrencies. Nevertheless, all crypto-to-crypto transactions will remain free from taxation.

The new proposed law excludes electronic money, NFTs, security tokens, and central bank digital currencies (CBDCs) from the new tax framework. All four of these exclusions are designed with consideration for the OECD’s Crypto-Asset Reporting Framework and the EU’s Markets in Crypto-Assets (MiCA) regulations.

New Legislation Offering Transparency

The new legislation improves compliance and transparency on crypto purchases and trading. If the legislation is passed, taxpayers would have to maintain detailed transaction records. They will also have to submit their annual tax returns by 31^st of March each year. Furthermore, merchants who receive €500 or more in crypto for their goods and services will have to report those transactions.

In order to help with the transition, the proposal draft has a “reset” clause. According to this, any crypto asset held or purchased before January 1, 2026, will have its acquisition cost set at the fair market value on that date. The new regime is set to take effect on the same day, pending parliamentary approval.

Outcome of New Tax Law

The Ministry of Finance of Slovenia estimates that a tax on crypto can generate between €2.5 million and €25 million annually. The public consultation is open until May 5 to get input and feedback from the general public and stakeholders. If passed, this law could change the country’s image as a crypto-friendly jurisdiction. As the public feedback deadline nears, crypto investors and businesses are closely watching how Slovenia’s once lenient tax landscape is set to transform.