Ljubljana - The Finance Ministry has sent a draft law on cryptocurrency taxation in for public consultation on Tuesday. It provides for a 10% tax on individuals exchanging cryptocurrency for fiat currency and on purchases made with cryptocurrencies. The threshold for tax liability would be EUR 15,000 in a calendar year.

The Finance Ministry has published the proposal on the e-democracy online portal for public consultation. The solutions in the proposal apply to natural persons who qualify as residents of Slovenia under the income tax act.

The law would not apply to natural persons that hold cryptocurrencies as an asset of the business they are carrying on, nor to legal persons.

The law would apply from 1 January 2022 and the ministry is accepting comments on the proposal until 10 November. Under the proposal, tax would be payable on the value of the cryptocurrencies realised, at a tax rate of 10%.

The exchange of cryptocurrency for fiat currency in the case of a payment to a taxpayer's account, as well as the purchase of goods, services or other property with cryptocurrency, would be considered as a realisation of cryptocurrency.

Meanwhile, the exchange of cryptocurrency for securities and shares in companies, cooperatives and other forms of organisation, as well as investment vouchers, would not be considered as a realisation of cryptocurrency.

Tax liability would arise at the moment the cryptocurrency is realised, if the total amount of the cryptocurrency redeemed in a calendar year exceeds EUR 15,000.

The proposal also provides for an alternative option to pay tax on the profit made, calculated as the difference between the value of the cryptocurrency at the time of cashing in and at the time of acquisition.

In this case, the tax rate would amount to 25%, but the exemption of EUR 15,000 per year would not apply. This option could also be used by taxpayers if they made a loss on a cryptocurrency, but this loss would have to be proven to the tax authorities.

Individuals would have to calculate the tax themselves, as the sum of the value of tax for each realisation of cryptocurrency during a calendar year. They would have to submit the data in an online tax return by 28 February for the previous year.

The Finance Ministry added that data on the volume of trading in cryptocurrencies was not currently available, as most transactions are carried out through foreign trading platforms, which are generally not yet subject to tax reporting.

However, it is estimated that under this proposal, the state budget revenue would amount to between EUR 100,000 and EUR 500,000 per year in the first few years.

The proposal is based on the principle of a general tax liability of natural persons, regardless of where the cryptocurrency is issued and regardless of whether it is redeemed in Slovenia.

An individual who fails to submit a tax return or to provide adequate documentation for a set period of time could face a fine of between EUR 250 and EUR 400, while those who submit incomplete or false data could face a fine of up to EUR 5,000.