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

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

The law stipulates that digital currencies 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 financial resources profits and other income from the sale of digital currencies, if exceeding €2,000 for each tax period, discovered through the redemption, sale, exchange or holding of crypto-assets. 

On the other side , exchange betwixt digital currencies having the same functions is not taxed. Consequently, regardless of the lack of clarity of the regulatory provision, it  can potentially be assumed that if a individual has sold Bitcoin against Ethereum (ETH), realizing a financial resources gain, this taxation will be deferred, while if a individual has sold Bitcoin against a crypto stablecoin, seeing as that the crypto stablecoin does not have the same function as Bitcoin (BTC), the transaction will be subject to taxation.

Financial resources profits are subject to a 26 percent substitute tax

The tax treatment of cryptocurrency in Italy

The possibility for cryptocurrency investment holders to revalue the value of their digital currencies as of 1 January 2023 to today’s value by paying a substitute income tax at the price of 14 percent instead of 26 percent has likewise been introduced. 

This is why, those who hold cryptocurrencies have an interest in taking advantage of this option, practically increasing the tax-bearing price and thus saving 12 percent in taxation. This tax can be paid in one lump sum by 30 June 2023 or in 3 equal annual installments, paying interest on the installments following the 1st at the price of 3 percent 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 percent (for each year) on the value of the undeclared crypto-assets if he or she has not discovered any income in that tax period. 

On the other hand, in the event that the taxpayer has discovered 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 percent of the value of the crypto-assets̀ held at the end of each year or at the time of realization, likewise aś an extra amount equal to 0.5 percent for each year of the aforementioned value by way of penalties and interest.

With regard to the payment of taxes concerning financial resources profits, 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- was known “administered savings” regime or the so- was known “managed savings” regime.

In the end, it is worth highlighting that the Legislator has intended to extend the scope of app  of the stamp duty, at the price of 2 per thousand per annum on the value of the assets̀, likewise 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.

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