Italy intends to levy a 26% tax on cryptocurrency gains. Additional Information

Following in the footsteps of Portugal, another European country is poised to tighten crypto regulations and expand taxation on cryptocurrency trading. A provision in Italy’s 2023 budget proposes a 26% tax on capital gains from cryptocurrency trading.

However, if the crypto profits exceed 2,000 euros ($2,062.3), this tax slab will apply. The tax authorities in Italy regard cryptocurrencies and tokens as foreign currencies.

The newly elected government of Italy, led by Prime Minister Giorgia Meloni, has asked taxpayers to declare the value of their digital assets as of January 1, 2023, and pay a 14% tax. The goal is to encourage Italian citizens to reveal their digital asset holdings as well as their tax returns.

If amended in parliament, the proposed law will extend stamp duty to cryptocurrencies and include disclosure requirements.

The recent development in Italy comes as Portugal, Europe’s most crypto-friendly destination, announced similar plans to tax cryptocurrency gains. Portugal announced in October 2022 that it intends to levy 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 adoption remains lower than in other countries, such as France (3.3%), and the United Kingdom (less than 5%). However, with such high crypto taxes in place, it may deter more players from entering the crypto space.

However, a number of major cryptocurrency exchanges have been expanding into Italy, citing potential business opportunities. The Italian government approved the establishment of Binance’s base in the country earlier this year.

The latest news is that cryptocurrency service providers Nexo and Gemini have been approved for registration with an Italian regulator. As a result, they will be able to serve Italian crypto enthusiasts.