The Italian Parliament has signed off on a proposal to tax cryptocurrency gains above €2,000 ($2,110). The country isn’t the only one in Europe to be changing its approach to crypto, either.

The new law not only imposes substantial taxes on crypto gains, but also provides incentives to taxpayers for reporting their cryptocurrency gains. For example, they could receive immunity for unreported gains achieved in prior years if they pay a 3.5% substitute tax, plus a fine of 0.5% for subsequent years in which they failed to report their earnings.

The law also allows for the deduction of crypto losses over €2,000. Moreover, the proposal allows taxpayers to declare their crypto holdings as of the beginning of this year and pay a 14% tax rate.

Local news outlet Rai News reported that the law was passed by the Italian Parliament as part of the 2023 budget. It is the first budget brought by Italy’s new prime minister, Giorgia Meloni, who promised significant tax cuts during her campaign.

Last year, the European Union (EU) approved new legislation, the Markets in Crypto Assets (MiCA). This strives to create a single regulatory framework for crypto across across the uion by 2024.

Portugal also recently proposed taxing crypto gains after being a crypto tax haven for years. It is proposed that from 2023, crypto gains that have been held for less than a year will be taxed at a rate of 28%, which is greater than the rate in Italy. However, the tax is only calculated against gains held for less than a year. Therefore, Portugal remains one of the more crypto-friendly EU countries.

Until now, Portugal has not had a tax on crypto gains. This has made it a popular destination for newly wealthy crypto owners.

Spanish tax lawyers reported that Spaniards who own cryptos were running away to Portugal in order to avoid taxes on their profits, among other things. With the country ramping up its regulation of the crypto industry, they voiced concerns that Spain was potentially becoming a “crypto desert,” where virtually no crypto activity existed.

Portuguese lawmakers have stated that taxing crypto is required in order to align rules with those in other European countries, including Germany. There, investors who hold crypto for over a year don’t pay taxes.