After Portugal, another European country is set to tighten cryptocurrency regulations and further expand taxes on cryptocurrency trading. A provision in Italy’s 2023 budget plan seeks to impose a staggering 26% tax on capital gains derived from cryptocurrency trading.
However, this tax slab will be applicable if the crypto earnings are more than 2000 Euros ($2062.3). Italian tax authorities have considered cryptocurrencies and tokens to be foreign currencies.
Italy’s newly appointed government, headed by Prime Minister Giorgia Meloni, has asked taxpayers to declare the value of their digital assets from January 1, 2023 and pay a 14% tax. The aim is to encourage Italian citizens to disclose their digital assets and their tax returns.
The proposed law, if amended in parliament, would extend stamp duty to cryptocurrencies and also include disclosure obligations.
Crypto taxes in Italy and across Europe
The recent development in Italy came as Europe’s top crypto destination Portugal announced similar plans to tax crypto earnings. In October 2022, Portugal said it plans to impose a massive 28% tax on short-term gains from digital assets.
As of now, 2.3% of Italy’s total population of 1.3 million people own digital assets. Cryptocurrency adoption still lags behind other nations like France at 3.3% and the UK at less than 5%. But with crypto taxes being so heavy, it could serve as a deterrent for more players to participate in the crypto space.
However, several major cryptocurrency exchanges have moved to Italy citing potential commercial opportunities here. Earlier this year, the Italian government gave the green light to cryptocurrency exchange Binance to establish its base in the country.
In the latest development, cryptographic service providers Nexo and Gemini have been approved to register with an Italian regulator. As a result, they could cater to cryptocurrency enthusiasts in Italy.