Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
The Italian government has asked locals to declare their crypto holdings for the last year. Coming forth to declare their crypto holdings would attract less tax.
Last week on December 29, the Senate of Italy approved a new tax rate for cryptocurrencies as part of its budget legislation for 2023. The Italian government will thus impose a 26% tax on capital gains on cryptocurrency trading for amounts greater than 2,000 Euros.
As per the approved legislation, cryptocurrency assets are “a digital representation of value or rights that can be transferred and stored electronically, using distributed ledger technology or similar technology”. Earlier, Italy used to treat crypto assets as foreign currency with lower taxes.
The Italian government put in the proposal for a 26% crypto tax in early December 2022, however, the final approval came last week. Currently, 2.3% of the total Italian population which is roughly 1.3 million people own digital assets. Of them, 57% of Italian crypto users are male and 43% are female. A majority of the crypto users in Italy belong to the 28–38 age group.
Interestingly, the bill mentions that taxpayers have the option to declare their crypto asset holdings by Jan 1, which could attract only a 14% tax. The intention behind these incentives is to encourage more Italian to declare their crypto holdings.
The recently approved budget law in Italy includes tax amnesties for reducing the penalties on missed payments, additional fiscal incentives for job creation as well as a reduction in the retirement age.
Giorgia Meloni, the first woman Prime Minister of Italy has received wide support for the bill from the legislative body.
Crypto Taxes Across the Globe
Italy is not the first country to impose cryptocurrency taxes. In October 2022, the crypto-friendly nation of Portugal also announced a 28% tax on crypto capital gains. However, it would only be applicable for cryptocurrencies held for less than a year. The 2023 State Budget document from the government of Portugal noted:
“Capital gains relating to crypto-assets held for a period of less than one year are subject to the rate of 28% (without prejudice to the aggregation option), with the capital gains referring to crypto assets held for more than 365 days exempt from taxation.”
In addition to Italy and Portugal, other countries like India have also imposed a heavy 30% tax on capital gains derived from crypto trading. Additionally, India has introduced a 1% TDS on all crypto transactions, a move that seems to deter the locals from participating in the crypto economy.