While approving its budget for 2023 the Italian Senate included an increase in the tax for crypto investors i.e. 26% tax on capital gains on crypto–asset trading above 2,000 Euros.
As per the legislation, crypto assets are defined as “a digital representation of rights or value that can be stored and transferred electronically through distributed ledger technology or other decentralized technology. Earlier the country treated Cryptocurrencies as foreign currency with lower taxes.
According to the latest taxation bill, taxpayers will also have the option to declare the value of their digital asset holdings as of January 1, 2023. Thus, it also sets a” substitute income tax” for investors at 14% of the asset value held on above- mentioned date instead of calculating the cost at the time of purchase of a such asset. This initiative intends to encourage Italians for declaring digital assets’ value.
Alongside, losses incurred on a crypto investment valued higher than 2000 Euros during the tax period can also be carried forward to the next tax period and knocked off from profits.
Further changes introduced in the budget law 2023 include tax amnesties for reducing penalties on missed tax obligations, providing fiscal incentives for job creation, and reducing the retirement age. Alongside, the budget law also talks about 21 billion Euros of tax breaks for households and businesses that are largely dealing with the energy crisis.
Italy’s latest budget law is backed by the approval of the Markets in Crypto Assets (MiCA) bill in October 2022. The latter is expected to establish a consistent regulatory framework for the cryptocurrency market in the 27 member countries which are a part of the European Union (EU).
Through this decision of the Giorgia Meloni-led Italian government, the country seems to acknowledge the presence of the virtual digital assets (VDAs) sector as vital for the existing financial system.