The Tax Treatment of Income from Cryptocurrencies in Slovenia

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There are currently more than 1000 different cryptocurrencies, amongst the best known are Bitcoin and Ethereum. Under the current regime, the tax treatment of income from virtual currency operations depends on the circumstances of each individual case. In principle, however, natural persons are required to pay capital gains tax on the sale of virtual currencies in the event that they generate such income in connection with the pursuit of their activities.

On August 31st the The Financial Administration of the Republic of Slovenia (Furs) has prepared a new proposal for the taxation of income from  virtual currencies. They will propose that taxation starts at the limit of 15,000€ of  the amount of cryptocurrency redeemed, or of the profit generated by the sale of cryptocurrencies.

According to a proposal published on Furs, the tax would be paid on the amount of cryptocurrency redeemed in one of the currencies or on the amount spent to buy goods. The tax rate would be set at 10%.

The proposal has been supplemented with the possibility of taxing the profits generated in this way. In this case, the tax rate would be 25%.

“Taxpayers will therefore have a choice of two taxation options – according  to the amount redeemed or according to the profit generated. Everyone will decide which option to choose,” Furs said. They emphasize that this proposal applies only to the natural persons, who are tax residents of Slovenia, and not to legal entities.

The calculation shows that a natural person who bought one bitcoin at a price of 3.000€ in December 2018 and cashed it in for 40.000€ today would pay 4.000€ of tax in the first case and 9.250€ in the second.

After the initial proposal received a great response from the interested  public, they also decided to propose the setting of a threshold amount up to which it will not be necessary to declare or pay tax on the redemption of virtual currencies or the profits generated by them. This threshold would be 15.000€ per calendar year.

There has been rapid progress in the field of virtual currencies in recent  years, and with this proposal, the Financial Administration wants to follow it, at least to some extend to simplify operations. “In addition, we want to become the first country in Europe for such an approach,” they wrote.

For additional information, please contact Elena Korovina our Accountant/Payroll specialist in Ljubljana, Slovenia at ljubljana@eurofast.eu.

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10/9/21