The new legislation from Prime Minister Giorgia Meloni also provides a tax incentive that reduces the usual rate for taxpayers who declare cryptocurrency as well as the value of assets held at the time of taxation.
A new budget that was approved by the legislative body on Thursday states that Italian cryptocurrency traders would be subject to a 26% capital gains tax as of 2023.
Italian Prime Minister Giorgia Meloni’s 2023 expansionary budget, which was hastily finished at the end of the year, includes tax incentives totaling 21 billion euros ($22.3 billion) to help firms and households dealing with the energy crisis, according to Reuters.
The 387-page budget legalizes crypto assets by describing them as “a digital representation of value or rights, which can be transferred and stored electronically, using the technology of distributed ledger or similar technology” in Italy, where crypto is still mostly uncontrolled.
Prior to the adoption of the Markets in Crypto Assets (MiCA) law, which guarantees a licensing structure and strict operating criteria for crypto-service providers in the 27-member bloc, Italy (and most recently Portugal) decided to impose a capital-gains tax on cryptocurrency.
Gains from cryptocurrency trading are subject to a 26% rate if they surpass 2,000 euros every tax period. The new measure also establishes a “substitute income tax” for investors at 14% of the value of the assets held as of January 1, 2023, rather than the cost at the time of acquisition, as an incentive for disclosing cryptocurrency earnings.
The new regulations allow losses from cryptocurrency investments to be subtracted from earnings and carried forward.
However, because the document also states that “the exchange between crypto assets having the same characteristics and functions,” does not constitute a “fiscal case,” investors may need some extra clarification on what counts as a taxable event.