By George Ward
Italy plans to tax cryptocurrency trading starting in 2023, following similar moves by nations like Portugal and India. It intends to allow involved parties to pay 14% of crypto gains.
This amount is lesser than the supposed 26% in its plans if the crypto investors declare the value of their assets as of January 1st, 2023. The move is similar to the Indian tax law implementation strategy, which allowed its citizens to announce their holdings early before the higher tax fee was enforced earlier this year.
The government aims to execute the laws early and stimulate Italians to declare their holdings of digital assets in their tax returns. This fee is less when compared to other European nations.
An instance is Portugal which is popular for its interest in cryptocurrency, had a harsh tax rate of 28% for crypto imposed in October. Although this bill may be changed in parliament, the proposed law by Prime Minister Giorgia Meloni includes transparency requirements and extends stamp duty to cryptocurrency.
Based on Triple A data, about 1.3 million people, 2.3% of Italy’s population, own crypto assets. This is less than that of the United Kingdom at 5% and France at 3.3% of their population respectively.
Until these recent developments, cryptocurrencies in Italy have been treated under foreign currency tax laws, which are considerably lower. The country’s investors, whose capital gains will be impacted by the tax hike, will react negatively.
Crypto license in Italy
The Italian government is looking more closely at the cryptocurrency market and wants crypto companies to get licenses. Gemini and Nexo, registered as virtual currency operators, have obtained licenses.
At the start of the year, Crypto.com, Binance, and Coinbase were also authorized to operate in Italy. AML and counter-terrorist financing regulations must be followed by exchanges and other cryptocurrency service providers to register.
These rules and registrations align with the upcoming implementation of MiCA laws by the European Union (EU). It is in line with the recent crash of the FTX exchange, which has increased interest in establishing controls.
There are issues with the exchanges’ vetting process, even though numerous exchanges have been approved in Italy. A crypto exchange must submit some information to register as a virtual asset service provider.
Despite a few additional steps, the registration process is relatively straightforward. This has resulted in many crypto exchanges, even minor ones, being permitted to operate nationwide.
Nevertheless, given that the MiCA bill will be in force in 2024, regulatory activity might soon pick up.