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Slovenia is one of the Cryptocurrency Tigers around Europe. Last April (https://sloveniatimes.com/cryptocurrency-tax-in-slovenia/) the Finance Ministry of Slovenia proposed a law to levy a 10% tax on all fiat-to-crypto conversions and cryptocurrency transfers. Now the country is getting ready to start taxing cryptos. Given that this will work out as an experiment in the eyes of several countries if everything goes well many other countries in Europe should follow.

Thing is, it puzzles me how are they going to tax cryptos... what sort of technics will the country develop to track all cryptocurrencies in circulation?

Under the current legal method, authorities analyze individual digital asset activities on a case-by-case basis by screening them through their buying and selling transactions. This can result in a stagnant and tedious crypto administration process.

The introduction of this progressive initiative aims to streamline the process digitally by focusing solely on the purchase of goods and services, or the conversion of crypto assets into fiat currency. In this parameter, individuals will be taxed at a rate of 10% of their income.

They want to emphasize that it is not profits that will be taxed, but rather the amount that Slovenian taxpayers receive in their bank accounts to convert virtual currency into cash or when buy something.

Good question, do Slovenia though has a local exchange? If yes, then they can track everything and put that 10% tax on their people.

If not, then the only method I can think of is that crypto enthusiast will have to report it to their local tax authorities. Now, it's just the question of morality, are you going to report your personal crypto profits or not? Are you willing to take the risk and hide before the authorities have to find it out?

It is really annoying, but you can also buy items that are not tracked by the government with BTC by finding a dealer that accepts the currency (luxury watches, goods and other stuff) and then sell it for cash.  ;)

Overall, I think that the taxation of crypto was inevitable since their attempts to suppress it ultimately failed.

Trading of anything including cryptocurrencies have always been subject to taxation. I've even seen up to 30% tax on trading profit. A lot of countries already have such taxes on cryptocurrency trading so it is not a new thing for "others to follow" after Slovenia does it since they are already behind themselves.
As for "transfers" you can't tax them at all unless they tax the businesses accepting bitcoin payments for each payment which is a different story.

Shouldn't the tax be from crypto to fiat conversion?
If it's fiat to crypto conversion it's almost like taxing unrealized assets like the US proposal of taxing the rich but actually affecting everyone.

Paying tax is everyone's responsibility to thier government though so it's got to be done I guess Slovenia will finally be doing it. If the experiment will not spark protest I guess it's fair to the Slovenians. If other countries will follow I think they should just adjust the minimum 10% is actually big.

Answer to your first question :
*Everyone*
Explanation:
During the pandemic the government of most countries are in a tight spot and also at the same time there are many things which they can profit from and one of them is cryptocurrencies like bitcoins, online gambling is emerging as a new market, one in every 4th person in the UK is a doing online gambling, what else could you get more profits from ? Taxation? Revenues? It's all something that the government looks for in profitable sector. What we should be worried about is a *fair tax* since at the end of the day in some places the tax is as ridiculous as 64% !!

Now your second question:
Whenever we talk about KYC being asked etc.. why do you think all of this exists?? Well people are being tracked by the government most of their lives, most wallets needs to be in with the norms or they will be banned therefore the wallets you do use, they are forced to supply your information indirectly in the database. Your taxpayer ID is usually connected to your bank accounts as well and any +/- would be seen as it is.

Cryptocurrency has value in fiat so if you are holding any of it, It's value in fiat will surely grow and that's the time when you will pay taxes even if you didn't trade it back to fiat. Cryptocurrency tax rate has a range varies from the duration of your holdings. So even just holding requires you to pay access as long as you are gaining in fiat. This is the current crypto tax law in US.

So if I understood correctly, you wouldn't get taxed if you HODL the specific crypto you have, but once you have converted it into cash, that's the time you need to pay taxes. So if you would go through P2P, I think that's where they could get the information on how much to tax on you or something like that. The history of your transactions is in there, so; I think that's where they will go.

The laws are different in each country. Usually it is capital gains tax (ie the profit you make by selling an asset like cryptocurrency to fiat). But it could be different weird things too, they could subject bitcoin owners to property tax if they wanted to. I'm not a tax expert though and as I said things are very different in each jurisdiction, for example where I live they are taxing miners but not traders!

From the OP I take it that the Slovenian Government are taxing the act of exchanging
and are proposing another tax on the value itself.

In my country we pay 33% capital gains tax if we sell an "asset". the 33% is on the profit.
Bitcoin and crypto are classed as "assets"

Most countries have some form of taxation but what the Slovenians are proposing is
like a double taxation, thats OTT IMO.

Maybe they can ask their local exchanges to give their members data to check in every local bank to get the real data.
People who use local exchanges to withdraw their funds from the exchanges will send the money to their local banks so if the government can get the data, they can easily ask them and use tax to their people.
That is the simple thing the government will do for the people who use crypto to make money so the other countries will do the same things.
But I am sure the government can easily track their people who use crypto and if it is necessary, they will apply the tax to them.

Maybe use a forum search engine and find information that already exists in a topic that was opened almost 2 months ago?

Slovenian crypto tax proposition (https://bitcointalk.org/index.php?topic=5358010.0)

Slovenia has already had very favorable laws when it comes to crypto, and what is now proposed actually goes to the advantage of small investors - the amount of up to 15 000 EUR (https://bitcointalk.org/index.php?topic=5358010.msg57849258#msg57849258) in one calendar year will not be taxed. Most EU member states have laws from the taxation of cryptocurrencies, but each country has its own position on this - my central bank does not recognize cryptocurrencies and puts them in the category of nothing, but at the same time, the tax office puts them in the category along with shares and thus collects taxes on capital gains.

The fact is that most politicians in the EU have no idea what cryptocurrencies are, but that does not stop them from collecting taxes on them. In Germany you don't have to pay any tax if 1+ years pass after you bought the crypto and then sell it, in Croatia the deadline is 2 years, and they say that in Portugal there is no tax on crypto at all.

It’s pretty normal to be honest, anything people are profiting from most govs want their share. In the UK it is 20% capital gains tax. Some countries are worse, some are better. 10% doesn’t seem too bad to be honest but if you have a real problem you can emigrate. Like others have said, Germany, Portugal etc are attractive options.

That's exactly what I was thinking. How can they tax a decentralized crypto? There is no way one can trace the ID of person associated with a particular wallet i.e BTC is Pseudo-anonymous. And that's the ideology of BTC and that's why govts are mostly against the crypto since they cant tax it.
The point is crypto that comes via centralized exchanges is not what Satoshi has created, don't call it cryptocurrency rather its just digital currency.

Crypto to fiat conversions are pretty easier to be taxed, all you have to do is make KYC mandatory to your local exchanges and most of the money would be under your radar, the most difficult part is to tax crypto for crypto or crypto for service transactions where a person makes payment for a service directly in crypto, the transaction is almost impossible to trace unless traced on standalone basis which will be quite expensive and time consuming, therefore this would be more like a Challenge for Slovenia to implement this, even direct taxes on crypto earnings would be based on good faith from citizens.

The countries in which people use cryptocurrencies and cryptocurrencies are not banned will choose to impose a tax on them of course. And all of the countries like this will follow each other in doing this too. This is really an inevitable thing to do as people are making a lot of money in this market. There are even so many people who make a living thanks to the crypto market. So, governments wouldn't prefer just letting people continue like this without paying any taxes.

Looks like a fair option if they are taxing when you are converting your cryptocurrency to fiat currency, even now i am paying my taxes for the profit i am earning through cryptocurrency even though there is no legal provision in the tax column that accepts cryptocurrency as a source of income but i am paying as income from other sources bracket just to be on the safe side.

Actually, even a %10 rate is big for taxing cryptocurrencies to me. But taking the action the USA have taken about this into account, this still seems to be a reasonable tax rate compared to it. Because the US government imposes an income tax on the cryptocurrencies. Earnings through cryptocurrencies are seen as income in there. When it comes to whether other governments will follow, I think that they will.

It kinda makes sense and is good for the wider adoption of Bitcoin in the long term. It either needs to be treated as a commodity or a currency, either way it is going to attract some sort of taxation - especially as it seems to be used more and more for speculation purposes rather than a functional trading currency. It might be better to start at a lower rate though, more like 3% or something because I have a feeling that 10% is going to result in many people not reporting transactions or actively using methods that will be tougher for the government to track (like cashing out via gift cards). I wonder what sort of exchanges are going to cooperate with the government of Slovenia for this type of reporting and will they be banned if they do not comply.

Actually the country where i do live in did really make out that kind of proposed bill about taxation of crypto earnings but it did turn out that everything is still on pending because how it could really be done so? If they would just focus on centralized platforms or wallets on where their citizens been cashing out or making conversion then its possible but in overall filtering then its impossible because there are lots of ways for people to cash out or convert
without passing  into these platforms which means they cant really still able to do so but well lets see on how they would be implementing on things.

Crypto tax will soon become a reality around the world. There are still many countries who don't recognize cryptos but soon they will be forced to recognize crypto and that will happen in very near future.

It's quite easy for a government to lavy taxes. They will allow only a handful of exchanges to operate in their country and laxy taxes on them which in turn will be levied to the end users. That's it! But 10% tax is quite less I would say, compared to the global standard!

I was also under the impression that most countries have a dedicated system in place specifically for cryptocurrencies, and if they haven't then any profits would be subject to income or capital gain tax, which might not be specifically for cryptocurrencies, but it would apply since you've made a profit. I think most countries have gone away from only taxing Bitcoin once it has been converted.

Also, if you mean transfers as in sending other users Bitcoin, then I wouldn't have thought they could tax that, since you aren't taxed that with fiat currencies. You should only be taxed on your profit; though how much completely depends on the country that you reside in.

The government had imposed taxes on these legit exchanges and the way to cover up those taxes they pay for them, that they have to ask for a share from their clients/users and traders. That is why we should have not wondered why these exchanges will ask for huge fees or commissions when having used them. I think some people don't feel it as it seems to be normal but I think this is what really happens and we as users had suffered most than these exchanges.

Before discussing taxes, we must first see if crypto is legal in the country...
If it is legal, it may be natural for the state to collect taxes from fiat to crypto transactions or vice versa.
But if it's not legal, I don't think it will tax crypto transactions.

The obvious policy difference is that it is extremely difficult to apply a crypto tax on the level of digital asset traffic without any oversight. It is puzzling how the government in Slovenia announced a crypto tax on decentralized wallets.
Except for traffic from bank accounts to exchanges.

Income from crypto that the government can control? can be effective as a share for the state?

The answer is no. Traders or investors with multiple cryptocurrencies will not report their crypto wealth just like that, because they know the taxes they will pay are quite large.
Reporting crypto wealth to local authorities will reveal everything that is held on the crypto platform.
Hiding may not be an option, but if there isn't a really appropriate method, it's still free to report it or not.

some large transactions involving crypto may be detected, but other transactions will be difficult to detect, so need another really efficient method to regulate and detect crypto transactions that will be taxed.

IMHO, I think it will be a very challenging task for Slovenian tax authorities, and it is a very difficult thing to do that all crypto transactions will be taxed, Anyway, it's too early to judge them so let them work first and conduct that experiment and if the government of Slovenia will successfully implement that plan to tax all crypto transactions, I'm, sure many countries will follow it and use the same method as well.

Eventually the others will follow yes. You didn't think the current state of chaos in crypto would last forever, did you? As crypto gets adopted, it is only natural for the governments to want to tax them. Otherwise it wouldn't be fair to the other investments. You make money from owning stocks, you get taxed, why wouldn't you when you make money from crypto? It is the same thing.

Governments opposed bitcoin and other cryptocurrencies just because they can't have control over it. Even now to certain extent it is possible to tax, countries like USA have channelized the crypto related activities. This gives them better outcomes compared to the rest of the world. Israel at the very beginning imposed tax considering it similar to digital gold.

Transition in the usage happens with time, Slovenia is very less populated. Just around 2 million is the population of Slovenia. In such countries it is possible to make effective functioning of tax over crypto activities. It isn't possible to follow the same with grown or countries with increased population.

High tax on cryptocurrency to fiat conversions actually encourages what Bitcoiners preach, and makes it the best solution, “the HODL”, and use Bitcoin ONLY if you need censorhip-resistance. 8)

Plus Taproot will make Bitcoin more private.

https://braiins.com/blog/explain-like-im-not-a-developer-taproot-privacy

Not surprising at all, imposing tax will be available to other countries too soon as they regulate and accept crypto. Fiat to crypto is subject for taxation but for a transfer? That's insane and absurd.
Buying or paying (sending to business) is considerable but for a transfer/giving/sending only? Nah.

I think that they will be going through the same routes that the IRS said they will in the us, ever since the cryptocurrency has became a highly active and profitable industry, they aught out to make regulation through income taxes, first the IRS said that they will go through the route of passing a law to make a lot of KYC exchanges and wallets like coinbase will report your trades and transactions, and other ways is if you are buying some expensive things even if you used a peer to peer exchange to fiat you would be subject to audit, it may seems difficult from our point of view for them to tax crypto but with how big it is becoming it may create some future problems, that i am sure that they will be addressing it and creating a proper infrastructure to control it and tax it, but at least they are not banning it like many other countries that don't have to tools or the budget to allocate to do such things.

Maybe with their local exchanges, everyone who is registered on that exchange is already subject to taxation for any amount of profit they get. We don't like to be taxed in crypto as this is why it's made to be against centralization that includes tax.

But I think that it can't go further without the government doing this. In the US AFAIK, you're required to declare it to the IRS how much you've made in crypto so this can also be like there in Slovenia.

The government here in my country is also starting to regulate cryptocurrency through the exchange of crypto to fiat, and no matter how much we complain about it, these governments will still find a way to actually gain profit from us sadly.

I'm reading from this source: https://news.bitcoin.com/slovenia-launches-public-consultations-on-crypto-taxation-law/

This isn't technically anything new. From what most countries tax system, if you convert Bitcoin into another currency, you need to pay taxes. If you mine it or receive it exchange for goods/service, it's considered taxable income. Slovenia is looking to clarify their tax system and make the standards more objective it would appear.

The major story would be if they introduced a convoluted tax system or some sort of wealth tax, to some large degree, which would disincentivize anyone to hold any coin. I see this being the way for most countries when they recognize crypto is beginning to displace their traditional currency. We aren't there yet, but when inflation rates continue to rise people will flock away from traditional fiats, and so I predict government will be attempting to increase tax revenue by taxing coin so they can raise the funds and pull people back into fiat.

I think this is too much because surely they'll also charge income taxes, right? Or is it going to be the only tax for cryptos, and it will have a fixed rate of 10%? In that case, it's not a bad tax rate. But the problem is that this encourages to sell for fiat on very rare occasions and in big batches because otherwise it'll be hard to pay taxes all the time. Also, it effectively makes crypto to fiat trading impossible, but perhaps it's not a big deal because one can simply use stablecoins for trading.
Some countries already regulate cryptos and imposed taxes on them. As for mine, cryptos aren't fully regulated yet, and while some people pay property taxes on them, that's not really necessary because they haven't been classified for tax purposes yet.

Expect it in the future that more rules and regulations will be impose just to be able to tax crypto in the future. Maybe as for now your country was having a problem with it but once the law in other countries like Slovenia imposes the same law in your country then there's no limit to how the government want it. And since your country doesn't seem to care that much or maybe they were just making a plan to impose a specific law or just studying how these crypto users get their money to finally detailed their plan about making a rules and regulations.

Most countries already define Bitcoin (Crypto currencies) as Commodities, so they tax it on Capital gains. Is this 10% on top of the Capital gains that are payable to the tax authorities? So they will have to implement it on the Exchange level and then have the exchanges paying it over to them?

The move, if it is to add it on top of the capital gains... will effectively help Crypto adoption and it's use as a payment option, because people will not convert to Fiat, if they are paying "super tax" on fiat conversions.  ;)  (They will rather keep crypto and pay with it directly)  :D

In my understating and practical approach they will tax only what are transactions happening through local exchanges or involving bank accounts. If you are holding bitcoin and you are selling it to your friend and your friend pays you in fiat then I guess that you both never need to bother anything on taxation. I am saying all these because this is what exact situation in US states where they have been into crypto taxation for years.

I agree that many country will copy what Slovenia will implement still I guess we need to pay tax for whatever we spend on shops and exchanges but we never need to worry on anything we save in our personal wallets.

We have no way to escape from paying tax even though we use crypto as surely we use exchanges to convert crypto to fiat money and we have to pay some transaction fees that caught up us. It wasn't just Slovenia is practicing this but this was been implemented a long time before. The government uses these banks and local exchanges as the medium to collect tax from their users. 10%, 20% transactions fees? That is huge and have no option but to agree with the term.

For our fiat earnings then theres no way that we could really able to avoid taxes but dealing up with crypto then we could still have at least able to do so and that's the beauty of it on general sense but since regulation becomes more stricter as we do go ahead on future years to come then I wont be surprised that
we would be soon taxed on those local platforms specially when converting your crypto to fiat which it cant really be that avoided.
Taxation is inevitable and this is something that government do always focus on.

This is quite expected because the country that allows Bitcoin and cryptocurrency in general to flourish has to take advantage of the opportunity to be making revenues via taxing transactions. But what about peer-to-peer? Am not so sure how the county can be able to implement a tax law with P2P so there is a big possibility that this can be the better option for the many who want to avoid the 10% levy. Personally, the rate is quite hefty maybe they should reduce that to around 3% or 5% at the most. People in cryptocurrency in that country should be making a representations with the government to reduce the rate and make it more acceptable to all parties. Of course, other countries might be already thinking of also establishing their tax policy on the matter.

the possible taxation method can be easily applied to local crypto exchanges because normally local crypto exchanges already require kyc to all their clients. so whenever you convert your crypto to fiat or vice versa, they can already implement such percentage to the local exchange.
however, they may really find hard to implement this on p2p platforms. but if for example, slovenia will find a way how to optimise their method, i am sure neighbouring countries and other countries may follow soon.
even if they will not get the full picture of crypto transactions of their constituents, at least, if they will implement the tax protocol, they will get something from these crypto users, which of course is not favourable from our end.

Right here in the Philippines, we don’t have specific tax guidelines on cryptocurrencies yet despite that we are now one of the friendliest countries in this industry. But for now, they said that any realized earnings are subjected to tax (crypto to fiat conversion). It would be so ridiculous if any country in the world would tax even unrealized value of the assets (but what if the price crashed down to Earth?).

I'm confused by this info.
Is this some kind of a 10% transaction tax over all crypto-to-fiat and fiat-to-crypto transactions or is it a new income tax?If this is a new income tax,then why isn't crypto already taxed in Slovenia?
Isn't crypto taxed is almost all countries in the European Union?Why would other countries follow the example of Slovenia,since almost all of them already taxed their cryptocurrency users.
Getting a 10% tax over all transactions seems too much to me.I think that this isn't going to happen.

Everyone knows that crypto become a safe haven to avoid tax... some countries have realized this situation long time ago but didnt expect that the popularity to get in crypto businesses increased drastically.

on top of that , it's a complicated one to tax crypto user ..lots of method been applied, yet you cant completely reached the full tax on them.
some tax crypto and consider it as a property , the other consider it as a commodities and so on.
mission impossible but at least government get something than nothing indeed. complicated.

Some people thinkit's not a good move for the people who work in cryptocurrency.But it's not a true.The true fact is,it was a good one.We can do transaction in very legal manner.It will find out the scammers in the field.So the people get the trust on online transaction.So many new people get into the crypto.Even many big shot make their investments.It will double or triple the price of bitcoin.

Especially this tax rate is quite fixed and in crypto, the number that each user converts as well as invests is absolutely not small, we always convert a large volume with great value, stick to large conversion costs then a very heavy fixed fee on the property, accepting such two parts of the cost, our assets have probably lost a lot of money after the conversions. Not so feasible and when thinking back on the benefits, governments are being quite selfish as they don't invest and contribute but still want the benefits, very against this and users when required to declare tax will evade because crypto allows anonymity

If there is something that our governments can never pass on is a revenue making opportunity and if Slovenia can be successful with its implementation of such a crypto tax system...several countries will want the blueprints of the system used to tax it's people. But because the system could take some time to give the success and true picture of its effectiveness of the system this isn't been adapted by other countries any time soon.

This is a good mechanism for levying taxes on cryptocurrency profits. Cashing out of capital in cryptocurrency anyway occurs by transferring funds to our bank accounts. If the banks themselves deduct 10 percent of such amounts, it will be easy, and the tax is not so big. I think that this is an acceptable option for crypto owners. In this case, it is better to pay these ten percent and sleep peacefully.
States will definitely impose a tax on profits from our activities in cryptocurrency, and this is not unusual. It is only important that this mechanism be convenient and the amount of tax should be small.

Getting tax from crypto will be another revenue for the country because crypto grew more than a few years ago and the sound is in many countries. If Slovenia has many crypto users, the government can get more sources of income for their country. The other country will look at this step and if its successful as you said, the other countries will take this chance for their country. But I guess many preparations before this plan can be successful and hopefully, it will give more opportunity for crypto to grow.

Is that possible and how they are going to tax crypto, Anyway as I read in the previous comments above they said that each crypto-fiat transaction will be taxed based on that idea I think that's simple but I presume that not all crypto users are using that kind of transaction crypto-fiat because most of the time they only use Stablecoins to convert their cryptocurrencies and then whats next? so that was a complex problem that need some further study before it was implemented.

I would have thought that using P2P would kind of eliminate that though I don't know. I am thinking this because in my country we are basically trading P2P now and that is just money exchanging hands within the banks with no info about Crypto but the cryptos transactions are in the exchange except of cause, you have to identify what the money transfer was for.  :-\

Other countries are much worse though, around 30% or more. I am not sure about Slovenia’s specific rules on taxing cryptocurrencies. It’s much worse if they are going to tax unrealized gains like the proposal of Nancy Pelosi in the United States. It’s much more difficult to tax if transactions are done on a P2P basis and not going into centralized exchanges. This is a challenge for the Slovenian government.

As for my home country the Philippines, we can only get taxed once we simply converted crypto to fiat and withdraw it to bank, mobile payment processor, etc., as realized income.