Italy released the details of its 2023 budget, and a part of it has left crypto enthusiasts in a frenzy. Part of the provision in the budget seeks to levy a 26% tax on capital gains derived from crypto trading. This tax on crypto gains has since generated reactions from industry players in the crypto ecosystem.
You recall that recently, Portugal announced it would expand taxation on crypto trading and toughen crypto regulations. This announcement came as a surprise— as Portugal is considered the most crypto-friendly nation. Coincidentally, Portugal announced the expansion of the tax to 28% while Italy pegs its tax levy at 26%.
Significantly, the new tax law will come into effect when several digital assets are still struggling amidst the crypto winter. Similarly, the wave of bankruptcies and collapses might have necessitated these regulators and government bodies— to tighten their policies toward the crypto industry.
Italy is the latest European country to announce a new tax regime on capital gains derived from crypto trading. The tax amendment is contained in Italy's proposed 2023 budget.
However, this tax levy will only apply to crypto profits that exceed 2,000 Euros.
Similarly, Italy's Prime Minister, Giorgia Meloni, has instructed taxpayers to declare the value of their digital assets as of January 2023. After declaration, they will pay 14% tax as long as their profits are not up to 2000 Euros. The government says this initiative encourages Italians to disclose their crypto holdings and tax returns.
Furthermore, there are expectations that the parliament will amend the proposed law before final passage. The amendment will extend stamp duty to cryptocurrencies and enforce disclosure obligations on crypto users and traders.
Reports show that a paltry 2.3% of Italy's entire population owns one or more digital assets— for a population of 1.3 million. For a country with such low crypto adoption, now imposing heavy taxes on the industry players, experts say it will further deter investors from the industry.
Furthermore, Italy has been recording an influx of crypto exchanges recently. Most of them opined that there are potential business opportunities in the country that will help increase the mainstream adoption of crypto.
You would recall that the Italian government recently approved some crypto exchanges. The likes of Binance received regulatory approval to function as a Digital Asset Service Provider.
Similarly, Nexo and Gemini are crypto service providers that recently got approval from an Italian regulator to serve crypto enthusiasts. Significantly, the Organismo Agenti e Mediatori (OAM), a supervisory body in Italy, says it has added 73 more exchanges to its virtual currency service providers list.
Furthermore, the country's tax authorities treat digital coins and tokens as foreign currency— as such, they attract lower taxation.
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