Following Portugal’s footsteps, another European government is poised to tighten crypto laws and expand taxes on transactions related to cryptocurrencies. A proposal in Italy’s budget plan for 2023 wants to levy a startling 26% tax on capital profits obtained from cryptocurrency trading.
However, this tax bracket will apply if the cryptocurrency profits exceed 2,000 euros ($2,062.3). The Italian authorities regard cryptocurrencies and tokens as foreign currencies.
The bill proposed by Prime Minister Giorgia Meloni’s cabinet also allows taxpayers to declare the worth of their assets as of 1 January, 2023, and pay a 14% tax. The goal is to encourage Italians to register their digital asset ownership in their tax forms.
The proposed legislation, which may be changed in parliament, contains transparency requirements and extends stamp duty to cryptocurrency intermediary fees and a 4% taxation on free cryptocurrency transfers in the case of an inheritance.
The new laws follow after a lengthy drop in digital asset prices, which has resulted in the demise of several prominent cryptocurrency platforms. The current spate of bankruptcies and spectacular collapses, like the recent meltdown of the exchange FTX, has prompted regulators worldwide to increase their examination of the young asset class.
Crypto Taxes Italy and Europe
The current plans in Italy come as Portugal, Europe’s most crypto-friendly location, announced identical plans to tax cryptocurrency gains. Portugal said in October 2022 that it intends to slap a massive 28% tax on short-term gains on digital assets.
As of now, digital assets are owned by 2.3% of Italy’s total population of 1.3 million people. Crypto usage is lower than in other countries, such as France (3.3%) and the United Kingdom (less than 5%). With such high crypto taxes Italy may dissuade other participants from entering the crypto industry.
Many prominent cryptocurrency exchanges have been expanding into Italy, claiming significant economic opportunities. The Italian government approved establishing Binance’s facility earlier this year. Nexo and Gemini have also been allowed to register with an Italian authority. As a result, they will be able to service Italian crypto enthusiasts.