Crypto taxation in Italy: yesterday’s and today’s differences

Until today, cryptocurrencies were understood for tax purposes as ‘foreign currencies’, so the norm was to pay the 26% substitute tax on capital gains only for those who held more than €51,000 on their wallets for more than seven working days. Those, however, who were below this threshold were not subject to tax. Now, with the new rule introduced by the budget law, cryptocurrencies are no longer seen for tax purposes as ‘foreign assets’, but rather, as ‘crypto assets’, retaining the taxation regime that applies to what are called financial assets.

The tax authorities, as a result of the new rule, have been very clear: the exchange of crypto assets with each other (crypto to crypto) are not taxed, but apply the substitute tax of 26% on those capital gains realised, i.e. from a sale, if the latter exceeds the new threshold of €2,000. The term capital gain is a term that among us crypto investors is creating some confusion and needs some order: the capital gain is calculated from the aggregate of all transactions made even on different exchanges and, from 2023, also from income from other activities (such as NFT staking, farming, etc.). In addition, a stamp duty of 0.2 % per year is introduced for all crypto holders compared to the old regulation.

What does “cashout” mean?

Cashout means to collect, so the moment we go to cash euros into our account, we will pay the tax; but there is a novelty: if on the exchanges where we hold crypto at some point we convert them to FIAT ( Euro ) we will pay the tax there as well. 

How do I reduce the risk of crypto volatility and not have to pay tax?

The simplest and most effective solution to not converting crypto into FIAT right away and going to pay tax is to stay in crypto assets and, therefore, convert the tokens into stable coins, i.e. coins that have a dollar countervalue. Doing so also mitigates the risk of the high volatility by which the crypto asset market is characterised.

2022 tax return compared to the one to come.

As I said before, crypto used to be considered as foreign currencies and therefore one had to go and fill in the RW panel of PF income, as monitoring was mandatory. Otherwise, the RT panel had to be filled in if one went to make cashouts and paid the 26% tax. With the new regulation, the filling in of the RW panel for the monitoring obligation remains unchanged, but the role of intermediaries is changed. If we hold crypto via Italian exchanges, it will be up to them to fulfil their monitoring obligations in comparison with the tax authorities, but if we hold crypto in foreign exchanges or in DEFI wallets, Ledger, etc., we have to fill out the RW panel.

Are NFTs considered crypto assets?

Yes, they are considered crypto assets and belong to the category we have discussed. We draw attention to the fact that they are crypto assets, but different from cryptocurrencies. Let’s take a practical example: if we buy an NFT with Ethereum and then later sell it and receive Ethereum, it is as if we had made a capital gain or loss, so they will be taxable with 26% tax.

Is there a rule to regularise those who have never declared?

Yes, in fact, a rule already exists in our system and is called ‘ravvedimento operoso’; it consists of paying 0.5% per year of the amount already declared in the RW panel, plus any capital gains tax. If, on the other hand, one were to follow the new rule, it would suffice to always pay 0.5 per cent per year of the amount specified in the RW return and add 3.5 per cent of the amount reported in the RW return if other income were present. Finally, one could also take advantage of the revaluation process, which I will try to explain with an example: if in the past I bought Bitcoin for €5,000 and today it is worth €20,000, it is possible to apply the revaluation by paying 14% of the difference between 5,000 and 20,000. This way our tax position will be in order. In conclusion, therefore, capital gains or losses start to be calculated from 20,000 € and not from 5,000 € which would be our purchase price.