Italian cryptocurrency traders will be required to pay a hefty 26% capital-gains tax starting from 2023. However, this is part of the nation’s latest budget passed through Parliament.
Giorgia Meloni, the Italian Prime Minister, hastily put together an expansionary budget for 2023 consisting of 21 billion euros ($22.3 billion) in tax cuts to help businesses and individuals struggling due to the energy crisis, as reported by Reuters.
Italy’s new budget legitimizes cryptocurrency
In Italy, where cryptocurrencies are still largely unregulated, the nation’s 387-page budget formally recognizes crypto assets by defining them as “a digital representation of value or rights which can be transmitted and stored electronically using distributed ledger technology” or similar technologies.
In anticipation of the European Union’s MiCA regulation, Italy (and more recently Portugal) have implemented a capital gains tax on cryptocurrency. This legislation provides licensing frameworks and stricter requirements for crypto service providers in the EU member states.
The 26% rate will apply to crypto tradings that surpass 2,000 euros per tax period
The new bill offers a 26% rate for gains exceeding 2,000 euros per tax period to incentivize filing crypto profits. In addition, there is also a “substitute income tax” that investors can opt into – this rate would be equivalent to 14% of the assets’ value on Jan. 1, 2023, instead of their original purchase cost.
Per recent regulations, any losses incurred from cryptocurrency investments can be deducted from profits and carried forward.
Investors may need additional direction on what is classified as a taxable event since the documentation states that “the exchange between crypto assets having same characteristics and functions” does not make up a “fiscal case.”