Italy’s 2023 Budget Includes 26% Tax on Crypto Gains, 21B Tax Breaks

• Italy approved a 26% capital gains tax on cryptocurrencies as part of the budget legislation for 2023.
• Taxpayers have the option to declare the value of their digital-asset holdings as of Jan. 1 and pay a 14% tax, incentives that are intended to encourage Italians to declare their digital assets.
• The bill also establishes 21 billion euros ($22.4 billion) of tax breaks for businesses and households dealing with the energy crisis.

On December 29, 2022, the Italian Senate approved its budget for 2023, which includes a significant change regarding taxation of cryptocurrency investments. This new legislation increases the taxation rate on capital gains from crypto trading to 26% for any trades over 2,000 euros. This new rate is a stark difference from the rates applied to foreign currencies which were previously lower.

The bill also introduces the option for taxpayers to declare the value of their digital-asset holdings as of January 1st, and pay a 14% tax. This incentive is intended to encourage Italians to declare their digital assets and avoid any potential penalties from missed tax payments. Furthermore, the bill provides 21 billion euros ($22.4 billion) of tax breaks for businesses and households dealing with the energy crisis.

The introduction of this new legislation has been largely supported by Giorgia Meloni, the first woman to serve as Italy’s Prime Minister. She had promised dramatic tax cuts when elected in September and her bill has received wide support from the legislative body. This new tax rate is intended to further encourage individuals to invest in cryptocurrencies and benefit from the potential financial rewards.