The Italian parliament has approved a proposal for a 26% tax on crypto profits above 2,000 euros ($2,110).
In addition to imposing a heavy tax on cryptocurrency earnings, the new law also introduces incentives for taxpayers to report their cryptocurrencies. Under the law, cryptocurrency owners are entitled to an amnesty for unreported earnings earned in prior years by paying a 3.5% โsubstitute taxโ plus a 0.5% penalty for each additional year.
The law was approved by the Italian parliament on December 29 as part of the 2023 budget, local media outlet Rai News reported. reported.
Unsurprisingly, the law also allows taxpayers to deduct their crypto losses greater than 2,000 euros.
Another incentive in the proposal is to allow taxpayers to declare their cryptocurrency holdings starting January 1 and pay a 14% tax rate.
The budget, of which the new tax on crypto profits is a part, is the first presented by the new Prime Minister of Italy, Giorgia Meloni, who during her campaign promised major tax cuts for Italians.
Italy's decision comes after the EU last year passed the Markets in Crypto Assets (MiCA) bill. The bill establishes a coherent regulatory framework on cryptocurrencies across the EU and is expected to come into force in 2024.
Portugal is no longer a crypto paradise
Recently, Portugal also proposed taxing crypto profitsafter the country for several years has been known as a crypto tax haven.
According to the proposal, cryptocurrency earnings held for less than a year will be taxed starting in 2023 at a rate of 28%, higher than the rate in Italy. However, since the tax only applies to cryptocurrency earnings held for less than a year, Portugal could still be seen as one of the most crypto-friendly countries in Europe.
Until now, Portugal has not taxed crypto earnings at all, which has helped make it a popular destination for wealthy new crypto owners looking for a new home.
Among other things, tax lawyers in Spain reported that Spaniards with cryptocurrencies were "fleeing" to Portugal to escape taxes on their token-related gains. They warned that Spain was on the verge of becoming a โcrypto desertโ as the country ramps up regulation of the sector.
Portuguese lawmakers have argued that the move to tax cryptocurrencies is necessary to bring the rules in line with cryptocurrency laws in other European countries, including Germany, where investors are not taxed if they hold cryptocurrency for more than a year.
So far, no other European country has announced new crypto-specific tax rules for 2023.
