December 5, 2022

Albania to introduce income tax on cryptocurrencies in 2023

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Albania to introduce income tax on cryptocurrencies in 2023

Against the backdrop of global tightening of regulation of cryptocurrencies, the Albanian authorities are going to introduce a tax on profits from digital assets and clarify the terminology.

Cryptocurrency activity tax forlegal entities and individuals should start operating in 2023. The draft law, which is currently under public discussion, introduces the concept of taxation of income from cryptocurrencies and virtual assets. He gives the first definition of a virtual asset for the first time in Albania:

“This is a digital representation of value thatmay be deposited, sold or transferred in digital form, and which may be used for payment or investment purposes, or as a medium of exchange, including but not limited to cryptocurrencies.”

This definition does not apply to currencies officially issued by central banks.

The document states that any incomederived from the business operations or mining of cryptocurrencies will be classified as business income with different tax rates depending on the type and size. In the case of individuals, income will be subject to a 15% investment income tax, excluding dividends.

The author of the bill determines the extractioncryptocurrencies as "the activity of using the computing power of the users of the system to solve cryptographic algorithms, confirmation, transactions and receive virtual instruments in return, as well as the activity of processing and confirming transactions by investing a virtual instrument designated by users of the computer nodes involved in the process."

Albanian legislation currently allows cryptocurrency trading, but so far, none of the licensed organizations are engaged in this business.

Recall that at the beginning of the month the Parliament of Albaniaurged the Financial Supervisory Authority (AFSA) to approve the missing crypto regulations before the end of the year, after consulting with international regulators.