Italy looks set to become the latest European country to cash in on crypto businesses moving into the region, with a plan to tax digital trading.
In a proposal bundled in with the country’s 2023 budget, a 26% tax would be imposed on capital gains larger than €2,000 ($2,062) made from trading crypto.
Previously, crypto has been treated in the same way as a foreign currency would be by Italy’s tax regime.
It comes after several global crypto businesses have prioritized expansion in Europe this year.
Bitpanda recently landed an operating license in Germany, adding to its list of places where it is registered, which includes Italy.
Meanwhile, Binance has registered as a digital asset provider in France, Italy, and Spain.
Gemini last month added five countries to its European presence, announcing yesterday that it had also secured regulatory approval in Italy and Greece.
Portugal has already announced a similar tax of 28% on profits made from selling digital assets that are held for less than a year, although crypto, which is held longer-term, can be tax-free.
Part of the Italian government’s plans would let crypto investors declare their holdings as of January 1, 2022, and get a lower rate of 14%.
Crypto taxes around the world
Different jurisdictions have proposed a variety of ways of taxing cryptocurrency and NFTs as they balance the desire to promote innovation with preventing investors from evading tax authorities.
Early in 2022, British tax authorities seized NFTs for the first time as part of an investigation into tax fraud and said it served as a warning to anyone who “thinks they can use crypto assets to hide money from HMRC [Her Majesty’s Revenue and Customs].”
More recently, Costa Rica has proposed nixing almost all taxes on Bitcoin in an effort to attract foreign investors and tech companies.
Elsewhere, India’s tax on all crypto transactions, which came in over the summer, has prompted many home-grown companies to leave the country.
In the U.S., the latest tax guidelines indicate that taxpayers should pay capital gains tax when they dispose of any digital asset, with NFTs, cryptocurrencies, and stablecoins all falling under the same category.