Slovenia getting ready to tax crypto. Will others follow?

[Blawpaw]

Slovenia is one of the Cryptocurrency Tigers around Europe. Last April 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?

[taufik123]

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.

[TravelMug]

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?

[submaster]

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.

[pooya87]

a law to levy a 10% tax on all fiat-to-crypto conversions and cryptocurrency transfers.

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.

[cabron]

a law to levy a 10% tax on all fiat-to-crypto conversions and cryptocurrency transfers.

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.

[fiulpro]

Slovenia is one of the Cryptocurrency Tigers around Europe. Last April 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?

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.

[Beparanf]

a law to levy a 10% tax on all fiat-to-crypto conversions and cryptocurrency transfers.

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.

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.

[crwth]

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.

[pooya87]

Shouldn't the tax be from crypto to fiat conversion?

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!

[aoluain]

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.

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.

[traderethereum]

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.

[Lucius]

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?

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

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 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.

[DeathAngel]

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.

[galambo]

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?

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.

[teosanru]

Slovenia is one of the Cryptocurrency Tigers around Europe. Last April 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?

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.

[Turbolinea]

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.

[eaLiTy]

~
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?

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.

[Cafex]

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.

[Fortify]

Slovenia is one of the Cryptocurrency Tigers around Europe. Last April 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?

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.