The Budget Law 2023 for the tax treatment of crypto assets, revaluation and their regularization
The Budget Law 2023 for the tax treatment of crypto assets, revaluation and their regularization

The Budget Law 2023 for the tax treatment of crypto assets, revaluation and their regularization

By Lars Schlichting - 23 Jan 2023

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The new Italian Budget Law 2023 introduced a number of new retroactive(!) tax obligations for Italian residents holding cryptocurrencies. 

The law stipulates that cryptocurrencies are no longer assimilated to foreign currencies, with the related obligation to register them in the RW form, introducing among the miscellaneous income a new taxable event that includes capital gains and other income from the sale of cryptocurrencies, if exceeding €2,000 for each tax period, realized through the redemption, sale, exchange or holding of crypto-assets. 

In contrast, exchange between cryptocurrencies having the same functions is not taxed. Thus, despite the lack of clarity of the regulatory provision, it could be assumed that if a person has sold BTC against ETH, realizing a capital gain, this taxation will be deferred, while if a person has sold BTC against a stablecoin, considering that the stablecoin does not have the same function as Bitcoin, the transaction will be subject to taxation.

Capital gains are subject to a 26% substitute tax

The tax treatment of crypto in Italy

The possibility for crypto asset holders to revalue the value of their cryptocurrencies as of 1 January 2023 to today’s value by paying a substitute income tax at the rate of 14% instead of 26% has also been introduced. 

Therefore, those who hold cryptocurrencies have an interest in taking advantage of this option, practically increasing the tax-bearing price and thus saving 12% in taxation. This tax can be paid in one lump sum by 30 June 2023 or in three equal annual installments, paying interest on the installments following the first at the rate of 3% per year.

In the event that the taxpayer has not declared his or her crypto-assets when filling out the RW form, he or she will still be required to pay a reduced amount of 0.5% (for each year) on the value of the undeclared crypto-assets if he or she has not realized any income in that tax period. 

On the other hand, in the event that the taxpayer has realized income in the tax period, he/she will have to file the petition with the Italian Tax Authority (Agenzia delle Entrate) and pay a substitute tax amounting to 3.5% of the value of the crypto-assets̀ held at the end of each year or at the time of realization, as well aś an additional amount equal to 0.5% for each year of the aforementioned value by way of penalties and interest.

With regard to the payment of taxes concerning capital gains, the rule introduced the option for holders of crypto-assets̀ on deposit with resident financial intermediaries to opt, as an alternative to the ordinary declaratory regime, for the so-called “administered savings” regime or the so-called “managed savings” regime.

Finally, it is worth highlighting that the Legislator has intended to extend the scope of application of the stamp duty, at the rate of 2 per thousand per annum on the value of the assets̀, also for transactions – held with resident financial intermediaries – having as their object the crypto-assets̀ and involving possible obligations of periodic communication to customers, even in the hypotheses in which no communication is sent or drafted.

Lars Schlichting

My key areas of experience are technology, data protection, regulatory and tax laws. I advise corporate clients in the application of new technologies like blockchain, as well as in the compliance in financial laws. In particular I am a specialist in anti-money laundering legislation applied to new technology, I was active in the establishing of different crypto exchangers in Switzerland and other crypto financial products. I am following a Data Protection CAS because Data Protection is the most important assets of any digital company and acting also as DPO. Further, I have extensive knowledge and experience in the tax field, especially automatic exchange of information and FATCA. I have issued numerous publications, among other concerning the consolidate supervision of financial groups, and the comments of the financial services laws and the automatic exchange of information act, as well as a science fiction romance.

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