The Italian parliament has approved the 2023 Budget Act presented by Giorgia Meloni’s government. The provisions include imposing a 26% tax on crypto gains and a lower 14% tax for citizens that report their crypto holdings.
On December 29, Italian lawmakers approved a new tax rule for cryptocurrencies in its Budget Act for 2023. The latest budget provision submitted to the parliament by Prime Minister Giorgia Meloni on December 24, imposing a 26% tax levy on crypto gains above a threshold of 2,000 euros, was passed by senators in a vote.
The budget is part of the country’s efforts to drive its economic comeback since the onset of the pandemic. According to Italian law, crypto tokens like Bitcoin (BTC) and Ether (ETC) are considered foreign currency and are subject to lower taxation. Taking this into consideration, January 1 onwards, the Meloni government is incentivising taxpayers that declare their crypto holdings to authorities with a lower 14% tax rate, instead of a purchase price which is subsequently higher. They will also be offered an amnesty on gains made since December 31, 2021, with a substitute tax of 3.5% plus an additional 0.5% as fine for every year that is missed out. This was done to encourage citizens to comply with the new regulations. Likewise, losses of more than 2,000 euros in a tax period are eligible for tax deductions and will be carried on to the next year.
The document defines cryptocurrencies as electronic distributed ledger-based investment instruments of value that can be held and transferred. According to statistics, 2.3% of Italy’s population currently own crypto assets, making it one of Europe’s largest when it comes to crypto adoption.
The law considered several pivotal circumstances where taxation will be considered for crypto assets, like when two cryptocurrencies with similar characteristics and functions are exchanged, it does not constitute a taxable event. The government is suggesting citizens consult their respective agents or authorities to receive guidance on how to present their crypto tax statements, as the law does not yet include cryptocurrencies with similar functions and characteristics.
The 2023 Budget Act which also includes, tax credits for electricity and gas, income for unemployed citizens, pensions for retirees and family allowances, was passed by the Senate in a majority as 107 members voted in favour, while 69 were against and one abstained from the vote. One of the main goals of the Meloni government when elected was to reduce taxes.
Italy’s latest crypto tax laws are on the same page with Portugal, one of Europe’s most crypto-friendly members. In October, the Portuguese government introduced provisions to impose a 28% tax on short-term crypto holdings from this year. This was a move away from the country’s earlier decision to only tax gains derived from crypto trades done as a business.
Earlier last month, India called on G20 nations to develop a global crypto regulatory standard that would ban unbacked crypto currencies, stablecoins and decentralised finance (DeFi). The EU is expected to pass its much awaited Markets in Crypto Assets (MiCA) framework regulating cryptocurrencies later this year, while the United Kingdom’s Financial Services and Markets Bill (FSMB), which has passed in the lower house of parliament in November, is expected to become law in Spring.