ALBANIA READY TO REGULATE AND TAX DIGITAL ASSETS

In Europe, there are many countries that are enthusiastically embracing cryptocurrencies and we have talked about them several times in our articles. Conversely, there are also pockets of resistance in countries such as Malta, to all intents and purposes the least crypto-friendly country in Europe.

Third among the least active countries on the topic of digital currencies is Albania, which, however, is reportedly planning to tax income generated by cryptocurrencies as of 2023, according to a new draft law.

Hence, the crypto phenomenon is not underestimated, so much so that taxation is being hypothesised with the draft currently under public consultation.

Clear steps forward in this regard with the definition of the virtual asset class, emphasising: ‘A digital representation of value that can be deposited, exchanged or transferred in digital form, and that can be used for payment or investment purposes or as a medium of exchange, including but not limited to cryptocurrencies’.

The definition excludes central bank digital currencies (CBDCs).

It also defined cryptocurrency mining as ‘the activity of using the computing power of system users to solve cryptographic algorithms, to confirm transactions and obtain virtual instruments in exchange, as well as the activity of processing and confirming transactions through the investment of a virtual instrument designated by the users of the computer nodes participating in this process’.

Under the new bill, any income from cryptocurrency transactions or mining will be classified as business income, with rates varying according to the type of activity, if applicable. In other cases, individuals will be subject to a 15% income tax.

But if we want to see the glass half-full, the taxation is certainly lower than in other countries that have provided for similar measures (India has adopted crypto taxation since 1 April, with a 30% rate on capital gains).

What turns out to be the natural sequel to this path is that at the beginning of July, the Albanian parliamentary assembly invited the Financial Supervisory Authority (AFSA) to pass legislation on cryptocurrencies and to ‘intensify cooperation with international regulators in order to obtain better experiences for this market’.

All the conditions are therefore in place for Albania to climb the ranks of the most crypto-friendly countries, thanks to low taxation and regulation.