Italy plans to impose a 26% capital gain tax on cryptocurrencies as of 2023. Although the tax is only applicable to gains that are up to 2,000 euros approximately $2,062.
Owing to this new law, crypto holders will be expected to declare their current crypto holdings and only a 14% tax will be requested on them. By doing this, it is believed that Italians will be incentivized to declare their crypto on their tax returns.
This law is yet to be approved but is still being considered together with the budget plans for 2023.
Before now, digital currencies were viewed in the same light as foreign currency under Italy’s tax regime, hence they attract a lower tax fee. This now comes as part of its approach to regulating crypto in the European Union (EU) especially after FTX Derivatives Exchange filed for bankruptcy and its founder Sam Bankman-Fried who was equally the Chief Executive Officer (CEO) resigned.
Now several regions have placed priority on regulation and are currently eyeing the EU region due to the incoming Markets in Crypto Asset (MiCA) bill which has now passed through the Parliament. Some of the few crypto exchanges that have entered the EU region are Bitpanda which received a crypto trading license from Germany, Binance, and Gemini.
Italy Joins Portugal to Impose Tax
Italy appears to be taking the baton from one-time crypto haven Portugal which previously proposed a 28% tax on capital gains on digital assets held for less than a year.
It was also to be added to its 2023 government budget. Previously, Portugal only imposed a tax on digital assets obtained via legitimate business or professional activity. The amount of time for which a digital currency was held did not influence its tax.
At the time of Portugal’s switch to charge tax on crypto less than a year, it was also noted that “brokers’ fees on cryptocurrency transfers will be subject to a 4% tax rather than the 10% tax imposed on free transfers. Moreover, crypto issuance and mining could also see some changes in new taxation rules.”