Cryptocurrency trading gains are subject to an Italian tax rate of 26% once they exceed €2,000 per tax period.

The Italian parliament had approved a 26% tax on any cryptocurrency-oriented profits above €2,000 on December 30.

This new legislation is part of the 2023 Italian budget. The budget describes cryptocurrencies as virtual representations of value that can be held and transferred electronically via a distributed ledger.

However, it maintained that cryptocurrencies do not qualify for fiscal cases. Notably, the document provides for losses on crypto investments, with every loss on crypto-oriented investments being deducted from profits.

The budget also seeks 21 billion euros ($22.3 billion) in tax breaks to support various businesses and households in the country facing chronic energy problems.

Additionally, Italy’s government under Giorgia Meloni aims to encourage crypto asset owners to disclose their assets. To encourage this, from January 2023, compliant holders will be able to pay 14% tax on their holdings, rather than the purchase price.

Italian government seeks clarification on crypto industry regulations

According to Giorgia Meloni, a good set of regulations that protect investors is the only way for the country to become a cryptocurrency hub.

The government has confirmed that it is ready to work with crypto exchanges to achieve this goal, which has encouraged companies such as Binance, Gemini and Nexo to obtain registration approval in the country.

In addition to Italy, other European countries have also taken steps to increase taxes on cryptocurrency gains. A few months ago, Portugal imposed a 28% tax on all profits from cryptocurrencies. Additionally, the Portuguese government intends to impose a 10% tax on free cryptocurrencies (including airdrops) and a 4% tax on cryptocurrency brokerage commissions.