Italy is planning to levy a 26% tax on capital gains generated from crypto trading starting next year, Bloomberg reported Thursday, citing a provision in the country’s proposed 2023 budget. However, the tax only applies to profits larger than 2,000 euros ($2,062).
Taxpayers to Declare Their Crypto Holdings
Per the report, the legislation, which was submitted by Prime Minister Giorgia Meloni’s government, will also give taxpayers the option to declare the value of their crypto assets as of January 1, 2023, and pay a 14% tax.
The legislation, which may still be amended by lawmakers, also extends stamp duty to digital assets and disclosure obligations. According to the report, “the aim is to encourage Italians to declare their holdings of digital assets in their tax returns.”
Before now, digital assets have been treated as foreign currency by Italian tax authorities and come with lower taxation.
According to reports, 1.3 million people, or 2.3% of the population, own digital assets in Italy. However, the figure is smaller than other European nations, such as the UK at 5% and France at 3.3%.
The new move by the Italian government is expected to discourage crypto investors and slow the growing use of crypto in the country.
Italy has followed a similar move by countries such as Portugal, which is planning to introduce a 28% tax on capital gains generated from crypto assets held for less than a year.
A Hotbed for Crypto Exchanges
Meanwhile, aside from the latest development, Italy has been very welcoming to crypto exchanges in recent times. Recently, crypto service providers Nexo and Gemini announced they registered as virtual currency operators in the country.
Some prominent crypto firms, including Binance, Coinbase and CryptoCom, have also previously announced they have gained regulatory approval to operate in the country. Per reports, Italy has issued regulatory approval for more than 70 crypto firms since May 2022.
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