New year, new budget law. Just like every year the new Italian parliament has approved the 2023 budget law on December 29th. Such budget law introduces clarity on the crypto taxation as well as Cryptocurrencies disclosure.
Find out more in the article below.
How does Italy tax crypto gains?
The 2023 budget law art. 1 comma 126 defines the crypto gains as other sources of income, therefore crypto gains do not belong to professional activities.
Gains not exceeding € 2,000 on any given tax year must not be reported.
The gain is calculated as the difference between proceeds (or exchanges) and the purchase price of the same item. Note that if you have inherited crypto currencies, or tokens, you must use the inheritance value, while if you have received such items as a donation; the base cost is the donor’s purchase price.
If you realize a capital loss exceeding € 2,000; you can carry it forward for the next four tax years.
Do I need to report cryptocurrencies in Italy?
The answer is YES. Every tax resident of Italy is required to report any financial asset hold overseas.
Unless you operate with an Italian registered exchange, you should report any crypto currency held in excess of € 51,645.69 for a period of 7 days or more. In order to abide to such reporting rules, you must file the RW form in your annual tax return, disclosing the January 1st and December 31st assets value (in €).
What happens if I fail to meet the deadline?
If you have read this blog you already know the answer. Italy does not have any possibility to file taxes in arrear once the deadline has passed; therefore, full fines are applicable to your assets.
Capital gains fines range from 120% up to 240% of the capital gains realized on any given year; on the other hand, foreign asset monitoring fine ranges from 3% up to 6% of the assets year end value.
It’s very easy to see your assets evaporate on unwanted fines and penalties.
How does the Italian tax office know if I have cryptocurrencies?
Albeit Cryptocurrencies are marketed as anonymous and hard to track, if you signed up on any exchange requiring a KYC (know-your-client) procedure, then such information is likely to be shared with the Italian tax office.
Furthermore, EU financial authorities must exchange financial information under various EU derivatives.
Finally, the EU is drafting the DAC 8 procedure, strengthening the information exchange on crypto currencies among EU countries.
What happens if I haven’t disclosed my crypto currencies? Am I in trouble?
In this case we have good news for you! Italy has just introduced a Crypto currencies amnesty included in the 2023 budget law art. 1 comma 133-141.
Comma 139 allows the the disclosure of your crypto currencies held at December 31st 2021 paying a one-off tax of 0.5% calculated on the year end value.
Assuming your crypto currencies portfolio at December 31st 2021 amounted to € 150,000, you can submit the amnesty and pay € 750 in fines to be compliant.
Comma 140 allows you to pay a one-off capital gains tax of 3.5% for gains realized up to December 31st 2021.
Note that if the crypto currencies derived from illicit trade, you may still be prosecuted for such actions; whilst the proceeds are now tax compliant.
How does the crypto currencies amnesty work?
First of all you need to file a special return (apart from your annual tax return), and you need to pay the fine on/before June 30th 2023. It is not possible to pay in instalments.
Finally, the tax office is required to release the special tax return form and the filing date within 60 days from the budget law approval (February 28th 2023).
Upon filing this return, and pay such taxes; the tax office cannot audit your positions disclosed.
How can AccountingBolla help you?
AccountingBolla is a licensed tax preparer in Italy. We can help you in:
- Assessing your crypto currencies portfolio;
- Calculating your tax liabilities;
- File your special tax return;
- Support your tax payment.
Get in touch using the form below.