Italy’s parliament has decided to impose a 26 percent capital tax on profits exceeding $2,060 (roughly Rs.1.7 lakh) generated out of crypto trading. The country has acknowledged the presence of the virtual digital assets (VDA) sector in the existing financial system This tax imposition will be implemented as part of Italy’s budget plans for 2023. As of now, the country has not decided upon a definitive set of frameworks around the crypto sector. Bringing VDAs under the tax regime for Italy, hence marks a milestone moment for the up-and-coming fintech sector.
The country has listed some incentives for crypto investors to encourage them to declare their holdings. One such incentive allows taxpayers to slash their capital gains at 14 percent of the price of the held crypto asset that was recorded on January 1, according to a report by Bitcoin.com.
In addition, losses beyond the mark of $2,060 (roughly Rs. 1.7 lakh) incurred because of crypto volatility will be seen as tax deductions, that would be added as information in the next tax period in Italy.
Most transactions facilitated via crypto assets are anonymous and untraceable. By taxing crypto transactions, nations like Italy have joined countries like India, Australia, Portugal, and South Korea, in attempting to formulate tax laws for the crypto sector.
As of last month, Italy was waiting for its crypto tax bill to be signed into the law.
The country is estimated to have over 1.3 million crypto holders. It has been taking gradual but continuous steps in favour of the cryptocurrency industry so that players feel welcome to set up shop and generate revenue.
Italy is also exploring ways to utilise blockchain technology. The government chose the Algorand blockchain to bring about improvements in existing banking systems starting this year. Algorand will support an upcoming digital guarantees platform in Italy to issue bank and insurance guarantees on blockchain, which is a digital ledger technology (DLT).
The UK, India, Australia, Portugal, and South Korea are among other nations that have created or are in the process of formulating tax laws for the crypto sector thriving in their respective territories.