In a recent move, Italy has announced a 26% tax on gains from cryptocurrencies which is said to affect both retail and individual as well as business investors. This development aligns crypto taxation with Italy’s standard capital gains tax rate.
According to local media reports, this might have wide-ranging implications for the country’s crypto market and influence the future regulatory landscape. The announcement of the imposition of a 26% tax on crypto surprised many and marked a decisive shift in the country’s approach to digital assets.
Sources reveal that the new tax regime will be imposed on profits generated from cryptocurrency transactions and will affect both individuals and businesses that hold or trade digital currencies.
Italy’s new tax regime takes away the previous tax-free status of cryptocurrencies and aligns with the country’s standard capital gains tax rate. For investors and traders residing in Italy, the new tax policy will have a direct impact on their crypto-related activities. For instance, profits of €2,000 or more derived from digital asset transactions will be subject to the 26% tax rate.
Notably, the law to impose the tax on gains from crypto was first proposed in November as reported by Todayq News. The law states that capital gains from cryptocurrency transactions fall under the category of miscellaneous income and they must be subject to a tax rate of 26% when they surpass a level that appears to be informally set at €2,000.
Therefore, the new tax regulations might encourage investors to look out for other investment options or seek tax-efficient solutions to minimize their exposure to the tax rate hike. In addition, the introduction of a 26% tax on cryptocurrencies in Italy might have broader implications for the crypto market as a whole.
Notably, the Italian government’s decision comes as cryptocurrencies continue to gain traction worldwide, and many countries are revising their tax policies to account for this emerging asset class. While it remains to be seen how this policy will affect the adoption of digital assets in the country, it could potentially influence other nations to reevaluate their tax policies concerning cryptocurrencies.
The crypto tax has been one of the most talked about topics amongst leaders across the globe in the past months. In March, the UK’s annual budget proposed that crypto holders will have to declare their profits on the capital gains form and will be subject to taxation when investments are sold for a profit. However, as per the current terms holding cryptocurrencies only will not incur a tax.
The United States also stepped up in matters of crypto taxes. Last month, U.S. President Joe Biden proposed a budget that included a provision to close the tax loss harvesting loophole on crypto transactions. In the budget, the U.S. Treasury Department proposed a 30% excise tax on the cost of powering crypto mining facilities. Additionally, it requires people with foreign financial accounts holding at least $50,000 in crypto to report these holdings in their tax reports.
As governments worldwide continue to deal with the challenges posed by digital assets, implementing tax regimes might become more common. Additionally, tax evasions have been a concern to regulators as well. As per data from Divly, a crypto tax firm, only 0.53% of cryptocurrency investors declared their cryptocurrency activity to their local tax authorities in 2022.
To combat these issues, the Internal Revenue Service (IRS) is expanding its global reach to investigate tax and financial crimes involving cryptocurrencies. The agency will send cyber agents to Australia, Colombia, Singapore, and Germany for a 120-day pilot starting on June 6. If successful, the agents will stay in their respective countries to advise U.S. case agents on obtaining evidence and assist with cultural and legal considerations.