The document also offers incentives for taxpayers to declare their crypto-currency holdings, proposing a 3.5% aliquot for undeclared crypto-currencies held before December 31, 2021, and a 0.5% fine for each additional year.
Italian parliament passes tax on crypto-currency capital gains
The Italian Parliament approved a new tax on crypto-currencies on December 29, as part of its budget law for the year 2023. Senators approved the document presented on Dec. 24, which approved a 26 percent aliquot for crypto-currency gains over €2,000 (about $2,060) during a tax period.
The crypto-currency capital gains tax had been proposed since December 1, when the budget bill was introduced. The approved document includes a series of incentives for taxpayers to report their crypto-currency holdings, proposing an amnesty on realized gains, payment of a “substitute tax” of 3.5% and the addition of a fine of 0.5% for each year.
Another incentive included in the budget bill will allow taxpayers to cancel their capital gains tax at 14% of the price of cryptocurrencies held on January 1, 2023, which would be significantly less than the price paid when the cryptocurrency was purchased.
Similarly, cryptocurrency losses in excess of 2,000 euros in a tax period will count as tax deductions and can be carried forward to subsequent tax periods.
Italy’s new crypto-currency tax law leaves room for interpretation
The law is clear on most of the key circumstances in which crypto-currencies will be taxed. However, the law mentions that “the exchange between crypto-assets with the same characteristics and functions is not a taxable event“. This means that users will need guidance in filing their tax returns, as these assets with the same characteristics and functions have not been defined in the body of the law.
Italy, which does not have a comprehensive regulation on crypto-currencies, is following in Portugal’s footsteps. The European country included a similar capital gains tax at a rate of 28% as part of its budget law for 2023, a move that could jeopardize the country’s status as a haven for cryptocurrency businesses and holders.
The proposal, revealed in October, also contemplates taxes on free crypto-currency transfers and commissions charged by crypto-currency exchanges and other crypto-currency operations to facilitate crypto-currency transactions.