Italy’s recent move comes as Europe’s most crypto-friendly nation, Portugal, announced a 28% tax on short-term gains from cryptocurrency.
Portugal isn’t the only European county tightening crypto regulations- Italy is set to as well. In their 2023 budget plan, there is a 26% tax on capital gains from crypto trading proposed.
However, this tax bracket will only be effective if the crypto profits exceed 2,000 euros ($2,062.3). Italy’s tax authorities perceive cryptocurrencies and tokens as foreign currencies.
The Italian government, headed by Prime Minister Giorgia Meloni, has requested that taxpayers declare the value of their digital assets as of January 1st, 2023 in order to encourage citizens totruthfully complete their tax returns. By taxing these undisclosed holdings at 14%, they hope more people will come clean about what they own.
If the proposed law is amended in parliament, stamp duty will be extended to cryptocurrencies and disclosure obligations will also be included.
With Italy’s recent announcement, Europe’s most crypto-friendly destination Portugal has also said that it plans to tax digital asset gains. In October 2022, the country stated that anyone making short-term profits from digital assets will be taxed at a rate of 28%.
Out of Italy’s total population of 1.3 million people, only 2.3% own digital assets as of now. Even though this number is higher than thatcrypto adoption rates in other nations such as France at 3.3% and the UK at below 5%, it might still serve as a deterrence for more players to participate in the crypto space due to heavy taxes on cryptocurrency exchanges.
A multitude of crypto exchanges have been relocating to Italy because of the business opportunities available here. The Italian government approved Binance, a crypto exchange, to establish its base earlier this year.
Italian regulators have approved crypto service providers Nexo and Gemini, allowing them to serve crypto enthusiasts in Italy.