The Italian Parliament has passed a budget law for 2023 that includes a 26% capital gains tax on cryptocurrency. The law, which was approved on December 29th, also provides incentives for taxpayers to disclose their cryptocurrency holdings by proposing a 3.5% tax rate for undeclared cryptocurrencies held before December 31, 2021, and a 0.5% fine for each additional year.
Italian Parliament Passes Capital Gains Tax for Crypto
On December 29th, the Italian parliament passed a budget law for 2023 that includes a tax on cryptocurrency gains. Senators approved the document, which was presented on December 24th, and it imposes a 26% tax on cryptocurrency gains above €2,000 (approximately $2,060) in a given tax period.
The capital gains tax on cryptocurrency had been proposed since December 1st when the draft of the budget law was presented. The approved document includes incentives for taxpayers to declare their cryptocurrency holdings, such as an amnesty on gains achieved by paying a substitute tax of 3.5%, plus a 0.5% fine for each year.
Additionally, the budget law includes an incentive that allows taxpayers to cancel their capital gains tax at a rate of 14% of the value of their cryptocurrency holdings on January 1, 2023, which is significantly lower than the price they paid when they purchased the cryptocurrency.
The budget law also allows cryptocurrency losses above €2,000 in a given tax period to be claimed as tax deductions and carried forward to future tax periods.
Italy’s Cryptocurrency Tax Law Allows for Interpretation.
The new cryptocurrency tax law in Italy is clear on most of the key circumstances in which cryptocurrencies will be taxed. However, the law includes a statement that “the exchange between crypto assets having the same characteristics and functions does not constitute a taxable event.” This leaves room for interpretation, as the law does not define what is meant by “assets having the same characteristics and functions.” This may require guidance for individuals to present their tax statements.
Italy, which has yet to establish comprehensive cryptocurrency regulations, is following in the footsteps of Portugal. The European country has also included a capital gains tax on cryptocurrency at a rate of 28% in its budget law for 2023, which could potentially jeopardize the status of the country as a haven for cryptocurrency companies and holders.
This proposal, which was announced in October, also includes taxes on the free transfer of cryptocurrency and on the fees charged by cryptocurrency exchanges and other crypto service providers for facilitating cryptocurrency transactions.
Joy Rice is a computer science graduate and crypto writer with a strong understanding of blockchain technology. She writes about the latest developments in the crypto industry, and is passionate about educating and informing readers about the potential uses of blockchain.