• Italy has passed a new law introducing a 26% tax on crypto gains above 2,000 euros.
• The new law also introduces incentives for taxpayers to report their crypto holdings and losses.
• Portugal has also recently proposed to tax crypto gains, albeit at a lower rate of 28% for holdings of less than one year.
The Italian parliament has recently passed a proposal for a 26% tax on crypto gains above 2,000 euros ($2,110) on December 29 as part of the budget for 2023. The new law, which was part of the first budget proposed by Italy’s new Prime Minister Giorgia Meloni, is aimed at bringing hefty taxes on crypto gains as well as introducing incentives for taxpayers to report their crypto holdings and losses.
Under the new law, crypto owners are entitled to an amnesty for unreported gains achieved in previous years by paying a “substitute tax” of 3.5%, plus a 0.5% fine for each additional year. Furthermore, taxpayers will also be able to deduct their crypto losses over 2,000 euros. In addition, the law also allows taxpayers to declare their crypto holdings as of January 1 and pay a tax rate of 14%.
The law is in line with the EU’s Markets in Crypto Assets (MiCA) bill, which was approved last year and is set to come into effect in 2024. The bill establishes a consistent regulatory framework on crypto across the EU.
Notably, Portugal has also recently proposed to tax crypto gains, albeit at a lower rate of 28% for holdings of less than one year. The country has for years been known as a crypto tax haven, so this move may come as a surprise to some.
Regardless, the introduction of these new laws in Italy and Portugal is a sign that more countries may follow suit in the near future. It remains to be seen if the new laws will be effective in curbing crypto-related tax evasion, as well as whether other countries will follow suit.