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Italy is set to impose a 26% capital tax on crypto gains as part of the 2023 budget law. Taxpayers are also encouraged to declare their cryptocurrency holdings by offering an amnesty on gains made or face additional fines each year they remain undeclared.
On December 29, 2022, the Italian Parliament approved a new tax for crypto as part of the 2023 budget law, Bitcoin.com reported. The document, which was presented and approved by senators on December 24, imposes a 26 percent tax for crypto gains above 2,000 euros (approx. $2,060) during a tax period.
The capital gains tax for crypto had been proposed since Dec 1, when the draft for the budget law was revealed. The approved paper proposes an amnesty on gains made, paying a 3.5% "substitute tax," and adding a 0.5% fee for each year as incentives for people to report their cryptocurrency holdings.
Another provision of the budget law will enable taxpayers to cancel their capital gains tax at a rate of 14% of the value of any cryptocurrency held on January 1, 2023, which would be much less than the amount paid when the cryptocurrency was purchased due to the current market downturn.
Meanwhile, the new law also allows total crypto losses in a tax period above 2,000 euros to be counted as tax deductions. The deductions will be carried out to the next periods.
The budget law is clear in key areas about when cryptos will be taxed. But it also stated that “the exchange between crypto assets having the same characteristics and functions does not constitute a taxable event.” Bitcoin.com noted that taxpayers will have to “receive guidance to present their tax statements, as these assets having the same characteristics and functions have not been defined in the body of the law.”
Italy, which does not have a comprehensive cryptocurrency regulatory framework, is imitating Portugal. The European nation's budget plan for 2023 contained a comparable capital gains tax at a rate of 28%, a move that would jeopardize the nation's standing as a haven for crypto businesses and holders.
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