(Kitco News) - As countries from around the world scramble to find new sources of income amid a global economy that is headed towards (or already in) a recession, Italy has unveiled a new taxing regime for digital assets.
According to a report from Bloomberg, a provision in Italy’s 2023 budget plan looks to implement a 26% levy on capital gains earned from digital asset sales where the profit exceeds 2,000 euros ($2,062.30).
This move from Italy follows a similar development in countries such as Portugal, where lawmakers are looking to start establishing more regulatory clarity around the trade of digital assets. In October, Portugal unveiled its plan to tax short-term gains on digital assets at 28%. This development was a clear sign that the global approach to crypto is shifting as the country was once considered a cryptocurrency tax haven.
Cryptocurrencies have thus far been treated as foreign currency by Italy’s tax authorities which granted them a lower tax rate, but the outsized nature of the gains possible in the crypto market has led to a reevaluation of how they should be taxed.
The bill, which was put forward by the government of Italy’s new Prime Minister Giorgia Meloni, also gives taxpayers the option to declare the value of assets as of Jan. 1, 2023, paying a 14% tax. It was designed in this manner in an effort to encourage Italian citizens to delare their digital asset holdings on their tax return.
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The Indian government adopted a similar approach where it allowed citizens to declare their cryptocurrency holdings before a new tax regime was put in place that would enforce a 30% tax rate.
Also included in the proposed law are disclosure obligations as well as stipulations that extend the stamp duty tax to cryptocurrencies. The bill must still be approved by parliament, which can also amend the law as its sees fit.
Data provided by Triple A indicates that 2.26% of the population of Italy, or roughly 1.3 million people, own crypto assets, which is a lower adoption rate than many of the countries in Europe including the UK (6%), Germany (5.64%) and France (3.3%).
It’s an interesting time to unveil such a bill as the cryptocurrency market has been embroiled in several high-profile implosions that have drained more than $2 trillion from the total crypto market cap since November 2021. Global regulators are taking this opportunity to increase their scrutiny of the nascent asset class and establish a regulatory framework that can potentially help protect investors from such notable bankruptcies in the future.
