Starting in 2023, Italy will charge a capital gains tax of 26% on crypto profits. The new law will require crypto holders to tell the government what they have and pay 14% on it.
According to Bloomberg, starting in 2023, Italy will start taxing capital gains from cryptocurrencies at a rate of 26%. In the country’s budget plans for 2023, the tax levy is proposed by the country’s lawmakers. The tax will only apply to profits of more than 2,000 Euros.
Taxpayers will also have the option to report the value of their assets as of Jan. 1, 2023. They will have to pay a 14% tax rate on these returns. This is similar to the new tax laws that were put in place in India earlier this year. The Indian government let its people report their holdings early, before the higher tax rate went into effect.
Until now, cryptocurrencies were taxed under the rules for foreign currency, which are much lower. The increase in taxes is sure to anger investors in the country, whose capital gains will take a hit. About 1.3 million Italians, or 2.3% of the population, own cryptocurrencies.
That number isn’t even close to as high as in some other European countries, but it’s clear that the government wants to get the laws in place as soon as possible. Portugal, a country where crypto is very popular, also recently put a high tax rate of 28% on crypto.
Italy is looking at the crypto market more closely and wants crypto companies to get licenses. Gemini and Nexo have gotten licenses in the country by registering as virtual currency operators. Binance, Coinbase, and Crypto.com were also given permission to work in Italy earlier this year.
The registration requires that exchanges and other crypto providers follow AML and counter-terrorist financing laws. These laws and registrations come at the same time that the European Union (EU) is about to start enforcing its MiCA laws.
Many exchanges have been approved in Italy, but there are questions about how the exchanges are checked out. This is especially important after the FTX collapse, which has made more people want to set up controls.
As a result, many crypto exchanges, even smaller ones, have been given permission to operate in the country. But when the MiCA bill goes into effect in 2024, there could be more regulation soon.
Crypto entities only need to send in ten pieces of information to become registered as a virtual asset service provider. There are a few more steps, but overall, the process of registering is pretty easy.