Italy is planning to step up regulations on cryptocurrencies next year by developing its tax laws to include crypto trading, according to the latest budget documentation.

Bloomberg reports that the 2023 budget comprises plans to implement a 26% tax on profits exceeding €2,000 made on crypto trading. Digital currencies have had reduced tax rates in the past as they’ve been deemed “foreign currency.”

Should the proposed bill become law, taxpayers will have the opportunity to declare the value of their digital asset holdings as of 1st January and pay a 14% tax. This initiative aims to urge Italians to declare their digital assets on their tax returns.

Currently, around 1.3 million people in Italy – 2.3% of the population – own crypto assets, according to Triple A data. In July this year, it was estimated that approximately 57% of cryptocurrency users were male, whilst 43% were female, with the majority aged between 28 and 38, Cointelegraph reports.

Furthermore, Italy looks to be following Portugal’s lead. Back in October this year, Portugal proposed a 28% tax on crypto capital gains held for under a year. A government report said at the time: “Capital gains relating to crypto-assets held for a period of less than one year are subject to the rate of 28% (without prejudice to the aggregation option), with the capital gains referring to crypto assets held for more than 365 days exempt from taxation.”

Within next year’s state budget, Portugal’s government addressed taxing crypto, which hasn’t been done before by authorities as digital assets were not deemed legal tender.

As it stands, Portugal intends to establish a “broad and adequate” tax framework with the objective of recognising the taxation and classification of cryptocurrencies. The proposed bill includes operations involving crypto mining and trading in addition to capital gains.