Blockchain

Italy to impose 26% capital gains tax on crypto profits

Italy is planning to tighten regulations on digital currencies by expanding its tax laws to include cryptocurrency trading in 2023, according to budget documentation released on Dec. 1.

Included in its 2023 budget are plans to impose a 26% levy on profits larger than 2000 euros ( $2,062.3) made on cryptocurrency trading, according to Bloomberg. Prior to this proposal, digital currencies had lower tax rates because they were previously considered “foreign currency."

In the proposed bill, taxpayers will have the option to declare the value of their digital asset holdings as of Jan. 1, and pay a 14% tax. This is set to incentivize Italian digital asset holders to declare their assets in their tax returns.

According to Tripe A data, 2.3% of the Italian population, which equates to about roughly 1.3 million people, own crypto assets in Italy. By July 2022, it was estimated that about 57% of crypto users were male, while 43% of users were female, with most of its users belonging to the 28-38-year age group.

Related: IRS to summon users who don’t report and pay tax on crypto transactions

Italy appears to be following in Portugal’s footsteps in the proposed taxation of digital currencies. In October, Portugal, the once-known cryptocurrency tax haven, proposed a 28% tax on capital gains from cryptocurrencies held for less than a year.

In the 2023 state budget, the Portuguese government addressed the taxation of cryptocurrencies, which had been previously left untouched by the Portuguese tax authorities, since digital assets were not recognized as legal tender.

The Portuguese government intends to create a "broad and adequate" tax framework aimed at cryptocurrencies in terms of their taxation and classification. The proposed tax bill covers operations involving cryptocurrency mining, trading, as well as, capital gains.

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