Italian Parliament Approves 26% Tax for Cryptocurrency Gains in 2023 Budget Law – The Italian parliament approved a new tax on cryptocurrencies as part of its budget plan for 2023 on December 29. Senators adopted the bill tabled on December 24 that authorized a 26% aliquot for cryptocurrency gains in excess of 2,000 euros (about $2,060) for a tax term. Since the 1st of December, when the budget law draft was revealed, the capital gains tax on cryptocurrency has been proposed.
The approved document includes a variety of incentives for taxpayers to report their cryptocurrency holdings, including amnesty on gains, payment of a “substitute tax” of 3.5%, and the addition of a 0.5% yearly penalty. Another incentive included in the budget law allows taxpayers to cancel their capital gains tax at 14% of the price of cryptocurrency kept on January 1, 2023, which is much less than the purchase price.
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In the same way, cryptocurrency losses higher than 2000 euros in a tax period will count as tax deductions and will be able to be carried out to the next tax period. The law is clear about most of the key circumstances in which cryptocurrencies will be taxed. However, the law mentions that “the exchange between crypto assets having the same characteristics and functions does not constitute a taxable event.”
Because these assets with the same features and functions have not been described in the body of the law, users will be required to acquire help when preparing their tax returns. In the absence of comprehensive cryptocurrency legislation, Italy is following Portugal’s lead.
As part of its budget plan for 2023, the European country includes a comparable capital gains tax at a rate of 28%, a move that could jeopardize the country’s standing as a sanctuary for cryptocurrency enterprises and holders. This proposal, which was made public in October, also considers taxes on the free transfer of cryptocurrency and on charges charged by cryptocurrency exchanges and other crypto businesses to facilitate cryptocurrency transactions.
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