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News on Bitcoin and crypto taxation in Italy

They finally did: news on the taxation of Bitcoin, a number of specific tax provisions on cryptocurrencies were included in the draft budget bill approved in recent days by the Italian Council of Ministers.

Five articles, from 30 to 34, pretty dense and, especially for the uninitiated, not easy to read, because the technique employed is that of a series of cross-references and insertions to pre-existing tax provisions that are modified or replaced. This results in the need for collage work.

It is perhaps because of this complexity, coupled with the eagerness to beat everyone to the punch with immediate, yet superficial, commentary, that several online news outlets have fallen into gross errors, such as spreading the news that capital gains taxation at 14% would be provided.

Let’s try to set the record straight by reviewing the main issues addressed by the bill. And it is good to remember that this is still a bill (DDL), which means that it will be necessary to wait for the outcome of the parliamentary process and the promulgation of the final text of the law in order to have certainty about what the actual wording of the rules will be.

The taxation of capital gains

The draft law establishes that capital gains derived from transactions in cryptocurrencies fall under the field of miscellaneous income and that, when fully implemented, they will be subject to a tax rate of 26%, where they exceed a threshold that in the draft law seems provisionally indicated as 2,000 euros and that could be the subject of specific discussion in parliament.

This is achieved first and foremost through an amendment to Art. 67 of the TUIR (the consolidated text of direct taxes) and the introduction in Paragraph 1 of letter c) sexies, which includes transactions on any “crypto-assets, however named, electronically stored or traded on distributed ledger technologies or equivalent technologies.”

The scope of this definition (and thus the scope of application of the rule) could be much debated, and indeed significant disagreements could arise in the future in determining whether or not the tax provisions contained in the bill should apply certain specific types of crypto assets. 

However, for now, let’s focus on the central issue, which is that of the application of the 26% tax rate. The mechanism is to provide for an extension also to what the DDL calls crypto-assets of the substitute tax already provided by Article 5 co. 2 of Legislative Decree 461/1997 for other forms of miscellaneous income such as, precisely, capital gains accrued from foreign currency transactions. Please note: the rule, as it is still worded today, indicates a rate of 12.50%. However, this rate was subsequently increased to 26% by DL 66/2014.


A crucial point of the provision introduced by Art. 30 co. 1 of the DDL is that “capital gains and other income realized through redemption or disposal for consideration, exchange or holding of crypto-assets” constitute the object of taxation.

The same provision specifies that “the exchange between crypto-assets having the same characteristics and functions.”

Now, the reference to mere holding and exchange transactions may raise doubts and some concerns.

First, it is not very clear how mere holding of crypto-assets could generate capital gains or other forms of income.

More importantly, where the rule states that exchange transactions would generate taxable matter unless they take place between crypto-assets that have the same characteristics and functions, it becomes crucial to establish what is to be understood by crypto-assets “having the same characteristics and functions.”

For example, there is no doubt that an exchange of Bitcoin for Ethereum or another two-way cryptocurrency is an exchange between crypto-assets having the same function (i.e., serving essentially as a means of payment). However, it can give rise to endless disquisitions whether or not such crypto-assets also have the same characteristics.

Be that as it may, these doubts aside, the way forward on the mechanism of taxation of income generated by transactions in crypto assets now seems to be mapped out.

It is worth noting that it seems to strive for maximum breadth of application in the crypto-asset sphere.

For one thing, NFTs seem to have all the characteristics to fall within the perimeter of a “crypto-asset, however named, electronically stored or traded on a distributed ledger or equivalent technologies.”

This brings us to other kinds of evaluations, not really of a legal nature, on whether or not it is appropriate to put crypto-assets such as cryptocurrencies with mere function as means of payment on the same level with NFTs and the infinite amount of tokens that serve completely different purposes and functions and are ontologically not assimilated to assets of even a remotely financial nature.

A discussion that, in all likelihood, will not fail to be initiated.

Monitoring requirements. The RW form

There is no shortage of provisions in the DDL that affect another typical black beast for crypto traders: that of monitoring obligations and thus of declaration in the infamous RW form.

Paragraphs 19, 20 and 21 of Art. 30 of the DDL, in fact, aim to make some changes to the provisions dictated by DL 167/1990 conv. in L. 227/1990.

In particular, Paragraph 21 of Art. 30 of the DDL modifies and expands the declaration obligations provided for in Art. 4 co 1 of DL 167/1990 and establishes that not only foreign assets of a financial nature but also crypto-assets are subject to declaration (in the RW form).

The rule would be amended as follows:

“Individuals, non-commercial entities and simple and equivalent companies […], resident in Italy who, during the tax period, hold investments abroad, of foreign assets of a financial nature or crypto-assets, likely to produce taxable income in Italy, must indicate them in the annual income tax return. The persons indicated in the preceding sentence who, although they are not direct owners of the foreign investments, foreign assets of a financial nature and crypto-assets,” are also required to make the declaration obligations […].”

Now, the way the provision is written, it would seem that the obligation to declare indiscriminately affects all crypto-assets, regardless of any question about the actual location of their holding, in Italy or abroad.

In addition, it comes back to the issue of a proper definition and perimeter of crypto assets relevant to tax obligations: the way the provision is written, the holding of any crypto assets, be they NFTs or tokens even without any financial function or nature, risk triggering the declaration obligation.

An obligation that seems disproportionate about which it is predictable that endless discussions and litigation will be triggered.  

The regularization of the past

Another important area of the package of provisions contained in the DDL is that which aims to provide accommodation on the front of prior relationships and situations.

Articles 32 (redetermination of the value of crypto-assets) and 33 (regularization of crypto-assets) take charge of this.

In a nutshell, Article 32 allows those who hold crypto-assets as of 1 January 2023, to apply as the basis of calculation for determining any capital gains or capital losses that may have accrued, not the cost or purchase value, but the value determined in the manner provided for in Article 9 of the TUIR (Consolidated Income Tax Act). This possibility, however, is subject to the payment of a 14% substitute tax by 30 June 2023, which may be payable in installments.

Article 33 of the DDL, on the other hand, allows those who have not declared income from crypto-assets held by 31 December 2021 to file a special declaration, in order to emerge from the assets. Depending on whether income has accrued or not, the taxpayer will only be required to pay penalties for failure to declare in the RW form in a reduced amount equal to 0.5 for each year on the value of the undeclared crypto-assets or (in case income has been earned) also a substitute tax equal to 3.5% of the value of the crypto-assets held at the end of each year or at the time when he/she should have disposed of them.

All of this must take place in the manner and under the terms that will be stipulated by a special provision of the head of the Italian tax authorities.

Moreover, the same provision specifies in paragraph 4 that it will be necessary to prove the lawfulness of the origin of the sums invested.

Which, of course, opens up a mare magnum on the question of how the lawfulness of the source will be demonstrated that may be considered suitable, since the DDL does not mention this at all.

The registration fee

Finally, Article 34 introduces the unprecedented imposition of a stamp tax, applied to periodic communications to customers, exactly as it is in the case of financial products, and a substitute tax of 2 per thousand, as of 2023, on those who hold crypto assets and reside in Italy.


Summing up, on a first analysis, the DDL unquestionably has some positive aspects: the fact that a government has finally taken an active role in attempting a systematic framing of the tax aspects of cryptocurrencies, as well as the attempt to shed light on past situations.

However, the fact remains that there are still many areas that need to be more clearly defined and that more effort should be applied at the definitional level.

Certain choices, in terms of legislative policy, appear extremely questionable: the fact that the tax treatment outlined does not take the functional nature of the assets into account at all, and above all, the draconian choice to apply monitoring obligations to the holding of assets, indiscriminately, of whatever nature they may be and regardless of any reasonable criteria for identifying assets that may actually qualify as foreign versus those that do not, is very perplexing.

Obviously, these doubts fall somewhere in the middle, between the initial framework and what will be the points of arrival as a result of the parliamentary process, which, however, promises to be pressing, and suggests that there may be little room for discussion on the specific issues related to crypto.

All that remains is to wait and hope that the legislature has the necessary sensitivity and ability to listen to those who bring specific expertise to the crypto world, and not just toward reasons for a cash register, empty as ever. 

Luciano Quarta - The Crypto Lawyer
Luciano Quarta - The Crypto Lawyer
Luciano Quarta, tax lawyer in Milan, managing partner and founder of the tax law firm QRM&P, has published extensively on the legal and tax aspects of legal tech, artificial intelligence and cryptocurrencies. A speaker at numerous conferences on the subject, he writes the column "Tax & the city" for the daily newspaper "La Verità" and regularly writes for the Economy and Taxes section of "Panorama". He is a member of the Tax Justice Commission of the Milan Bar Association and is the contact person of the Milan office of the interdisciplinary association for the study and application of artificial intelligence GP4AI (Global Professionals for Artificial Intelligence).