On 29 December 2022, Italy has published Budget Law No. 197 in official Gazette No.303 related to the State Budget for 2023 and the multi-year budget for 2023-2025. The provisions of the law generally entered into force on 1 January 2023.
The key tax measures in the budget law include the following:
- The sugar tax and plastic tax are suspended up to 1 January 2024.
- Tax credits for the purchase of electricity and natural gas are extended to the first quarter of 2023.
- The VAT rate is reduced to 5% (currently 10%) for feminine hygiene products and baby products including certain milk and food products, diapers, and child seats for vehicles.
- The VAT rate is reduced to 5% on supplies of natural gas until March 2023.
- The cash basis transactions cap is increased to EUR 5000 (currently EUR 1000).
- 15% lump sum tax applies for qualifying individuals with income up to EUR 85,000 (increased from EUR 65,000).
- A new 50% temporary solidarity contribution one-off windfall tax applies on surplus income of energy companies that have benefited from the surge in oil and gas prices.
- A new rule is introduced clarifying the possibility that activities performed by individuals who manage investments in Italy on behalf of nonresident investment vehicles may not trigger the existence of a permanent establishment in Italy.
- Non-Italian tax resident taxpayers can opt for a special tax step-up of the basis of participations in Italian companies and land located in Italy held as of 1 January 2023, through the payment of an upfront substitute tax at a 16% rate applied to the market value of the participations and land as at 1 January 2023.
- Budget law introduced new rules for the taxation of cryptocurrencies. Capital gains and other income realized on the sale of cryptocurrency is subject to tax if equal to or greater than EUR 2,000 in a tax period. Capital gains also allowed to be offset by capital losses from cryptocurrency and excess loss allowed to be carried forward up to 4 subsequent periods.
