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(Kitco News) – As countries around the world scramble to find new sources of income amid a global economy that is heading towards (or already in) recession, Italy has unveiled a new tax regime for digital assets.
According to a report by Bloomberg, a provision in Italy’s 2023 budget will introduce a 26 percent levy on capital gains from the sale of digital assets if profits exceed €2,000 ($2,062.30).
This move from Italy follows a similar development in countries like Portugal, where lawmakers are looking to start creating more regulatory clarity around digital asset trading. In October, Portugal unveiled its plan to tax short-term gains from digital assets at 28%. This development was a clear sign that the global approach to crypto was changing as the country was once considered a cryptocurrency tax haven.
Cryptocurrencies have so far been treated as foreign currency by Italian tax authorities, which granted them a lower tax rate, but the outsized profits possible in the crypto market have prompted a reassessment of their taxation.
The bill, presented by the government of Italy’s new Prime Minister Giorgia Meloni, also gives taxpayers the option to declare the value of assets from January 1, 2023 and pay a tax of 14%. It was designed this way to encourage Italian citizens to declare their holdings of digital assets on their tax returns.
The Indian government took a similar approach, allowing citizens to declare their cryptocurrency holdings ahead of a new tax regime that would enforce a 30% tax rate.
Also included in the proposed legislation are disclosure requirements and provisions that extend stamp duty to cryptocurrencies. The bill has yet to be approved by Parliament, which can also amend the law at its own discretion.
Data provided by Triple A shows that 2.26% of Italy’s population, or about 1.3 million people, own crypto assets, which is a lower adoption rate than many countries in Europe, including the UK (6%), Germany (5, 64%) and France (3.3%).
It’s an interesting time to introduce 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 step up their scrutiny of the emerging asset class and create a regulatory framework that can potentially help protect investors from such notable bankruptcies in the future.
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