[World Tax News] Italy introduces tax on Crypto and indirect transfer and more

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  • Last Updated on 18 July, 2024

Italy's tax on Crypto

Editorial Team – [2023] 146 taxmann.com 117 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. Italy presents the budget for 2023, introduces tax on Crypto gains & indirect transfer of real estate

The Italian Budget Law for 2023 has introduced new limits on expense deductions, regulations for the indirect transfer of real estate, and rules for the taxation of cryptocurrencies. Law No. 197, published on 29th December 2022, also includes the state budget for 2023 and the multi-year budget for 2023-2025.

The following are some of the main tax provisions included in the law:

(a) Tax on crypto gains

New rules have been introduced for the taxation of cryptocurrencies in Italy. Capital gains and other income realized from the sale of cryptocurrency will be subject to tax if they are equal to or greater than EUR 2,000 in a tax period.

Capital losses from cryptocurrency can be offset against capital gains from the sale of cryptocurrency, and any excess loss can be carried forward for up to four subsequent tax periods.

(b) Tax on undistributed profits

A one-time substitute tax has been introduced on undistributed profits of subsidiaries that benefit from a privileged tax regime. This tax is levied at a rate of 9% for companies and 30% for individuals on qualifying undistributed profits.

Parent companies may be eligible for a 3% point reduction in the tax rate, down to 6%, if certain conditions are met. These conditions include repatriating the profits by a certain deadline and setting aside the profits in a specific equity reserve for a minimum of two years.

(c) Tax on indirect transfer of real estate

Govt. has introduced new rules for the taxation of indirect transfers of real estate located in Italy.

Gains from the sale of shares in non-resident companies or entities will be taxable in Italy if, at any point within the 365 days before the sale, more than 50% of the value of the shares was derived directly or indirectly from real estate in Italy. However, there is an exemption for shares listed on a regulated market.

(d) Increase in the threshold of lump sum tax

The income threshold for applying the 15% lump sum tax for individuals engaged in business and professional income has been increased from EUR 65,000 to EUR 85,000. Now, individuals with an income below EUR 85,000 will be subject to the 15% lump sum tax.

(e) Windfall profits tax

A temporary solidarity contribution (windfall profits tax) has been established for the year 2023 for companies that produce, import, or sell electricity, natural gas, or petroleum products.

The contribution will apply if at least 75% of the company’s revenue in the prior year was from these activities. The contribution rate will be 50% of corporate income in 2022, which exceeds 110% of the average income for the years 2018 to 2021. The tax must be paid within six months after the end of the year (30th June 2023 if following the calendar year).

(f) Increase in cash transactions limit

The maximum amount for cash transactions has been increased from EUR 1,000 to EUR 5,000.

Source: Budget 2023

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