Slovenia Plans to Take a Bigger Bite out of Crypto Profits by Taxing Gains at 25%

After imposing a 10% tax on crypto withdrawals in 2023, the country's Finance Ministry has now suggested a new law to add a 25% tax on crypto trading gains.

Slovenia is planning to take a bigger bite out of crypto profits. After imposing a 10% tax on crypto withdrawals in 2023, the country’s Finance Ministry has now suggested a new law to add a 25% levy on digital asset trading gains.

This move comes amid a broader tightening of crypto regulations in Europe. Several European countries are planning to introduce or modify tax regimes on cryptocurrencies in 2024, aiming to align them with international reporting standards.

If approved, the new tax regime in Slovenia will begin on January 1, 2026.

Who Will Be Taxed & How?

Slovenian residents will be taxed 25% on net gains from crypto when:

* Selling crypto to fiat currency

* Receiving crypto payments for goods or services

* Transferring crypto to another person

This shift marks a significant expansion in how Slovenia treats crypto transactions for tax purposes. Currently, only capital gains from selling shares held for more than one year are taxed at a rate of 20%.

Who’s Exempt From This Tax?

Not all crypto activity will be taxed. The proposed law clearly outlines exceptions:

* Mining income will be taxed according to existing rules on self-employment income, which usually falls in the 38%-48% range.

* Unpaid crypto donations to charities will be tax-deductible.

* Crypto gifts between family members will be exempt, but only if the total value doesn't exceed a defined threshold.

In addition, individuals will be required to report annual crypto earnings and maintain accurate transaction records, a step toward greater transparency.

Lawmaker Warns Of Negative Impact

However, not everyone agrees with the new plan.

Jernej Vrtovec, a member of the opposition New Slovenia party, said that heavy taxation could have a negative impact and scare off investors, which might slow down crypto growth in Slovenia. He believes the government should encourage innovation, not push it away with high taxes.

"It is clear that we do not want to discourage people from investing in cryptocurrencies, but rather create a fair and transparent legal framework," Vrtovec said.

Meanwhile, Finance Minister Klemen Boštjančič said the goal of the tax isn't just to collect more money but to bring fairness to the system. He pointed out that crypto is one of the most speculative financial assets and believes it’s only fair to apply tax rules similar to those for other investments.

How Big Is The Crypto Market In Slovenia?

With an estimated 98,000 crypto users expected in 2025 and a growing market projected to bring in $2.8 million in revenue, Slovenia’s crypto scene is still developing.

The government anticipates that this new tax could generate between €2.5 million to €25 million a year, depending on how active the market becomes.

For instance, the UAE, Portugal, and El Salvador currently offer 0% tax on crypto gains for individuals. But several European nations, including France and Spain, already levy taxes on capital gains from crypto investments, usually in the 30%-50% range.

As the global crypto landscape continues to evolve, it will be interesting to see how countries like Slovenia balance encouraging technological advancement with securing their own fiscal interests.