Italian Parliament Approves 26% Tax on Crypto Income in 2023 Budget Law

The document also offers taxpayers incentives to report their holdings of cryptocurrencies, offering a 3.5% aliquot for undeclared cryptocurrencies held before December 31, 2021, and a 0.5% penalty for each additional year.

Italian parliament passes tax on capital gains in cryptocurrencies

The Italian parliament approved a new tax on cryptocurrencies on December 29 as part of its 2023 budget law. The senators approved a document submitted on Dec. 24 that approved a 26% aliquot for cryptocurrency revenues in excess of €2,000 (approximately $2,060). during the tax period.

Cryptocurrency capital gains tax has been proposed since December 1, when the budget bill was introduced. The approved document includes a range of incentives for taxpayers to declare their crypto holdings, offering an amnesty for realized gains, paying a 3.5% “surrogate tax” and adding a 0.5% penalty each year.

Another incentive included in the budget law will allow taxpayers to eliminate the 14% capital gains tax on the price of a cryptocurrency held on January 1, 2023, which will be well below the price paid when buying a cryptocurrency.

Likewise, losses of cryptocurrencies in excess of €2,000 in a tax period will be treated as tax deductions and may be carried forward to subsequent tax periods.

Italy’s new cryptocurrency tax law leaves room for interpretation

The law clearly defines most of the key circumstances under which cryptocurrencies will be taxed. However, the law mentions that “the exchange of crypto assets with the same characteristics and functions is not a taxable event.” This means that users will need to be advised on how to submit their tax returns, as these assets with the same characteristics and functions are not defined in the body of law.

Italy, which lacks comprehensive cryptocurrency regulations, is following in the footsteps of Portugal. The European country has included a similar 28% capital gains tax in its 2023 budget, which could jeopardize the country’s status as a safe haven for businesses and cryptocurrency holders.

This proposal, made public in October, also provides for taxes on the free transfer of cryptocurrencies and fees charged by crypto exchanges and other crypto transactions to facilitate crypto transactions.

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