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Increased Taxes on Cryptocurrency: The Italian Government’s Most Recent Move

Italy is paving the way in Europe for more regulations around cryptocurrency. The Meloni government has inserted a provision in the text of the recent budget law, which will soon have to be approved by Parliament, to regulate revenues from digital currencies. 


Specifically, there will be a tax on cryptocurrency income and general regularisation of activities in a sector that does not yet have well-defined rules.


In the text on which the Chamber of Deputies will have to work, the perimeter on which the new taxes will focus is primarily defined: "Capital gains and other proceeds made through repayment or transfer for consideration, exchange or holding of crypto-assets, however, denominated, archived or electronically negotiated on distributed register technologies or equivalent technologies, not less than a total of 2 thousand euros in the tax period. For this provision, exchanging crypto-assets with the same characteristics and functions does not constitute a fiscally relevant case".


Therefore, the fixed limit for crypto exchanges is 2 thousand euros and refers "to the difference between the consideration received, i.e., the nominal value of the crypto-assets exchanged, and the purchase cost or value. 


The capital gains are algebraically added to the relative capital losses: “If the losses are greater than the capital gains, for an amount exceeding 2 thousand euros, the excess is fully deducted from the number of capital gains for subsequent periods, but not beyond the fourth, provided that it is indicated in the tax return relating to the tax period in which the capital losses were made", while "the proceeds deriving from the holding of crypto-assets received in the tax period are subject to taxation without any deduction."


Recently, income from cryptocurrencies was considered in Italy a "different income of a financial nature" and, therefore, subject to a substitute tax of 26%. According to the text of the maneuver dated 1 January 2023, "for each crypto-asset held, instead of the purchase cost or value, the value at that date, determined under article 9 of the aforementioned consolidated tax law, can be assumed on income, on condition that the value above is subject to a substitute tax of income taxes, to the extent of 14 percent".


These provisions are a starting point for regulating a financial reality many countries are afraid to recognize. The increasing popularity of cryptocurrencies makes them a useful investment tool in the eyes of many. The willingness of the Italian Government to regulate it shows an open eye toward the future of finances. 



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