While Italy has been taxing cryptocurrencies as foreign currency until now, the country is planning to toughen taxation on the crypto sector. According to the 2023 budget presented by the government, crypto profits above €2,000 will suffer a 26% levy. This tax toughening is reminiscent of similar measures taken in several countries including Portugal. Still, there is a small hope that this overtaxation in Italy will not pass…
26% for any crypto gain over 2,000 euros
Italy, which has been a cryptocurrency-friendly state until now, could switch to the other camp as early as next year. That’s because the budget bill presented by Prime Minister Giorgia Meloni‘s government indicates an increase in the tax rate on cryptocurrency as early as 2023. According to Bloomberg, the 2023 budget proposal calls for imposing a 26 percent levy on any crypto gain over €2,000.
In addition, the 2023 budget bill grants Italians the ability to declare their crypto assets starting early next year. The declared assets can then be taxed at 14%.
For now, the new taxation is not yet in effect. It will first have to be passed by the country’s parliament. So there is a little hope for crypto users in Italy.
Italy is a crypto-friendly state, though. Indeed, the country considers cryptocurrencies as foreign currencies. One of the consequences of this is that it has a very advantageous tax system for crypto. It is probably also because of this bearable taxation that Italians are turning to it. According to Triple A data, about 1.3 million people hold crypto in Italy. This represents 2.3% of the country’s population.
Italy follows in the footsteps of Portugal, not Japan
This tightening of crypto taxation in Italy is reminiscent of the case of Portugal. This country is considered the most crypto-friendly in Europe. In fact, Portuguese retail investors do not pay taxes on their crypto gains. Not sure if this will still be the case in 2023. The budget bill sets a 28% levy for crypto gains in Portugal.
Overtaxation of the crypto sector is not seen everywhere. Other states prefer to introduce tax breaks in the cryptocurrency sector to develop it and attract more investors. This is notably the case in Japan. In fact, last September, Japan’s Financial Services Agency proposed to ease the tax burden on cryptocurrency companies as well as private investors.
The need for regulation of the crypto sector is being felt with great urgency today. With one bad news after another following the FTX collapse, it is legitimate for a state to protect its citizens. Nevertheless, overtaxing crypto does not protect users.
I dream of a world where every citizen has total control over themselves, including their finances. I believe that Bitcoin is one of the tools that will achieve this revolution. Since 2019, I am learning about this cryptocurrency and spreading the word around.