Author: TaxDAO
1. Introduction
Italy’s attitude towards crypto-assets is generally open and And cautious. In 2021, Italy opened up crypto asset trading. In the following years, the growth of the Italian crypto asset market was very significant. According to 2024 data, more than 3.6 million Italians owned crypto assets, and the total market value of Italian crypto assets increased in the past An increase of 110% in one year. At the same time, the Italian government also attaches great importance to the risks of the crypto industry and continues to strengthen the supervision of risks related to crypto assets. The Bank of Italy will also soon implement the Markets in Crypto-Assets Regulation (MiCA) regulations to ensure effective supervision of the crypto asset market and Protect cryptocurrency holders. In addition, the Italian government has also formulated relatively friendly tax policies to encourage and promote the development of crypto-asset-related financial industries.
2. Overview of Italy’s basic tax system
2.1 Italian tax system
< p>The Italian tax system is mainly divided into two categories: direct tax and indirect tax. Direct taxes cover items such as personal income tax, corporate income tax and inheritance tax; while indirect taxes include value-added tax, real estate tax registration tax, customs duties and other types. According to Article 119 of the Italian Constitution, Italian regions, provinces, cities (towns) can formulate regional tax laws within the scope provided by the constitution and law.
The tax year in Italy is the same as the calendar year, and income tax and VAT returns for the previous year must be submitted before September 30 of the current year. Failure to declare will be subject to a fine ranging from 250 euros to 1,000 euros (no tax is incurred) or a fine ranging from 120% to 240% of the tax payable, plus interest if any tax is incurred. If a tax return is submitted within the next year's tax filing deadline, the penalty ranges from 200 to 500 euros (no tax is incurred), or 60% to 120% of the tax payable, plus interest (if tax is incurred).
Generally speaking, personal income tax and corporate income tax are paid in three installments during each tax period. For example, personal income tax is paid through self-assessment. On June 30 of this year, 40% of the estimated income tax of the previous year must be paid, and on November 30, 60% of the estimated income tax of the previous year must be paid. The actual income tax The difference from the estimated income tax paid is due on June 30 of the following year. For value-added tax taxpayers who file monthly returns must pay the tax before the 16th of the next month, and taxpayers who file quarterly returns must pay before the 16th of the second month after the end of each quarter. The tax authorities have the right to audit the taxpayer's tax return within five years after the tax filing year.
2.2 Main types of taxes
2.2.1 Personal income tax
According to the Italian Income Tax Code (Testo Unico Delle Imposte sui Redditi, referred to as TUIR), Italian tax residents are required to pay personal income tax on their income earned worldwide, while non-residents are only required to pay tax on income derived from Italy. Income that needs to be reported covers major categories such as employment income, self-employment income, business income, real estate income, investment income and capital gains. The scope of tax-free income includes death benefits, unexpected income, qualified long-term investment returns and profits from the disposal of real estate held for more than five years.
For the identification of resident taxpayers, Italy considers an individual (whether an Italian citizen or not) to be an Italian resident if he or she meets any of the following conditions: Registration in the Registry; having a domicile or residence in Italy in accordance with Article 43 of the Civil Code. According to Article 43 of the Civil Code, domicile refers to the place where an individual habitually lives, and residence is the location of the individual’s center of main interests (center of significant interests).
When calculating personal income tax, there are currently no other direct deductions except alimony, medical expenses related to the disabled, social insurance expenditures, medical insurance premiums and charitable donations. Currently, Italy does not set a basic personal tax exemption limit, but taxpayers can enjoy different tax exemptions based on their family status.
Italy now has three levels of personal tax: national, regional and municipal. Taxes are collected according to a progressive system. Starting from the 2022 tax year, the progressive personal income tax rate stipulated by Italian national tax is that the annual income does not exceed 15,000 euros, and a progressive personal income tax rate of 23% is levied; if the annual income is between 15,001 and 28,000 euros, the levy rate is 25%; If the annual income exceeds 55,000 euros, the tax rate is 35%; if the annual income exceeds 55,000 euros, the tax rate is 43%. On the basis of the national tax, a regional surtax of 1.23% to 3.33% and a municipal surtax of up to 0.9% will also be levied. In addition, financial practitioners must pay an additional 10% income tax for the portion of their variable remuneration (such as bonuses, stocks, options, etc.) that exceeds the fixed annual salary.
2.2.2 Corporate Income Tax
The corporate income tax payers in Italy cover joint stock companies and limited partnerships (except resident partnerships, Income is taxable among partners), limited liability companies, cooperatives (including for-profit, not-for-profit cooperatives), business entities and other corporate forms. It is worth noting that non-resident partnerships only need to pay corporate income tax directly.
For the recognition of resident enterprises, the Italian standard is that within a financial year, if the company’s registered place (that is, the place specified in the company’s articles of association), actual management organization or main business has more than half of the If it is located in Italy, the enterprise is regarded as an Italian resident enterprise.
Resident enterprises are required to pay corporate income tax on their income in Italy and abroad, but they have the right to choose to apply for tax exemption on their income obtained through permanent establishments abroad. In terms of tax rates, the corporate income tax rate has been reduced from 27.5% to 24% since 2017. After the implementation of the Budget Law in 2019, the tax rate was significantly reduced again to 15%. In addition, Italian financial intermediaries (except asset management companies and brokerage companies) and the Bank of Italy are required to pay an additional 3.5% income tax surcharge.
2.2.3 Value-added tax
According to the Italian Value-Added Tax Law, taxpayers of value-added tax include entrepreneurs, artists and professionals person. Imported goods from countries outside the EU are also subject to VAT. According to Italy's "VAT Law", all transactions of goods and services carried out in Italy, as well as goods imported from abroad, are subject to VAT. Value-added tax adopts standard tax rate and preferential tax rate. Among them, the current standard tax rate is set at 22%, while the preferential tax rate is subdivided into three different levels: 4%, 5% and 10%.
It is worth noting that Italy has tax incentives for finance and related industries. The Value Added Tax Law regulates credit transactions and related businesses of banks and other credit institutions (including credit secured by stock options and similar secured transactions); management services of joint investment funds by banks and credit institutions; foreign exchange and foreign currency credit transactions related businesses ; Damage insurance, life insurance and reinsurance business and intermediary services; businesses related to stocks, bonds and other non-commodity securities are within the scope of services exempt from VAT, but their input VAT is not deductible.
2.2.4 Financial transaction tax
The financial transaction tax stipulates that for shares issued by companies registered in Italy and participatory finance Transfers of ownership of instruments are subject to a financial transaction tax, which is usually set at 0.2%. In addition, if the main underlying securities of the derivatives are stocks or participatory financial instruments issued by Italian companies, or there is a close link with the value of these securities, then transactions in such derivatives are also subject to financial transaction tax. Financial transaction tax is imposed at a fixed rate unless certain exemptions or exclusions apply. The amount of this tax will vary depending on the nature and notional value of the derivative. For OTC transactions, the tax limit is set at €200. However, for transactions carried out on regulated markets or multilateral trading facilities, the amount of tax can be reduced, usually to one-fifth of the normal amount. It is worth noting that both parties to the transaction need to pay this tax, and the payment is usually completed by financial intermediaries. This tax policy provides useful reference and reference for the tax management of cryptocurrencies and the crypto industry, and lays a solid foundation for the improvement of crypto asset tax policies.
2.2.5 Digital Transaction Tax
This tax stipulates the placement of advertisements on digital interfaces targeted at users of that interface; providing users with multi-sided digital Interface that enables users to contact and interact with other users and facilitates the direct provision of potential goods or services; transfer of collected user data and data generated by users’ activities on digital interfaces, the total revenue (excluding VAT and other indirect taxes payable), which are not included in any costs and are levied at a rate of 3%. Income from the provision of digital services to an entity controlled by the supplier, a service-controlling entity or an entity under common control with the supplier is not subject to digital services tax. This tax law will help create a more fair and orderly market environment, provide strong legal support and guarantee for the future development of the Italian financial industry and encryption industry, and promote their high-quality development.
2.2.6 Financial Asset Tax
Financial asset tax regulations will apply to resident individuals in Italy from 2020 (also covering simple Partnerships and non-commercial institutions) impose foreign financial assets tax. This tax applies to financial assets such as financial products, bank accounts, postal accounts and savings accounts held overseas, with a tax rate of 0.2% of their value. If these financial assets are managed by Italian intermediaries, additional stamp duty will be payable. Specifically, according to Article 19 of Law No. 201 of 2011, Italian residents are subject to tax on their foreign financial assets. The tax is calculated based on the market value of these assets or, if the market value cannot be determined, their nominal value. For bank accounts, postal accounts and savings accounts, there is a fixed tax of 34.20 euros per account. Financial asset tax provides valuable guidance for the tax management of cryptocurrencies and their industries, and has a significant impact on building a more complete crypto-asset tax policy system.
3. Italian crypto tax policy
3.1 Overview of Italian crypto tax policy
In the 2023 budget announcement, the Italian tax authorities issued a tax regulation specifically targeting cryptocurrencies. The new regulation clearly defines crypto-assets as “digital representations of value or rights that are transferred and stored in electronic form using distributed ledger technology or similar technologies.” This definition includes almost all types of digital assets, including stablecoins, NFTs , governance tokens, utility tokens and many other types. It is worth noting that in 2023, Italy will also usher in some major changes within the framework of the budget law. There are new regulations on capital gains tax and the introduction of an alternative value tax specifically for cryptocurrency gains for the first time. This change marks Italy’s A new era in cryptocurrency tax administration. These two taxes are the main taxes that crypto assets need to pay. Crypto assets are not subject to VAT in Italy.
3.2 Cryptocurrency tax system
3.2.1 Income tax
The following are taxable events considered by Italian tax law: sale of crypto assets in exchange for fiat currency, conversion between cryptocurrencies, use of cryptocurrencies to pay for consumption, cryptocurrencies received as consideration for goods or services, cryptocurrencies given as gifts, Cryptocurrencies obtained through mining, salaries paid in cryptocurrency by employers, income generated from staking crypto assets, and cryptocurrency airdrops received, etc. In addition, selling investment crypto assets for profit is also taxable.
Capital gains/gains need to be classified as miscellaneous income. Italy’s capital gains tax is levied on any digital assets derived from blockchain technology, and any profits realized exceeding the €2,000 threshold are subject to tax. The capital gains tax rate is uniformly set at 26%, and taxable capital gains are calculated based on the difference between the sale price of the cryptocurrency and the purchase price of the cryptocurrency. In addition, if the capital loss exceeds 2,000 euros, this part of the loss can be fully deducted from the capital gains in the subsequent accounting period, but the deduction period shall not exceed the fourth period. However, taxpayers must record the cost or purchase value in some clear way, otherwise the relevant costs will not be recognized and treated as zero value.
Whether it is income obtained through trading, mining, or staking, as long as it exceeds the prescribed limit, it will be subject to the same tax treatment. It is worth noting that this tax liability only arises when the crypto-assets are actually disposed of, such as sold or exchanged. Unrealized capital appreciation is not included in the immediate taxable basis. Under relevant regulations, swaps between cryptocurrencies do not constitute a taxable event. Italy does not yet provide a dedicated tax framework for cryptoassets obtained through mining or staking, so they may be considered “miscellaneous income” along with other cryptoassets.
3.2.2 Alternative Value Tax
In order to actively encourage cryptocurrency holders to increase transparency in the declaration of crypto assets, the Italian government An innovative alternative value tax policy was launched in 2023. This policy aims to guide crypto asset investors to be more proactive in declaring their crypto assets by providing a more favorable tax rate as an incentive.
According to the specific provisions of the alternative value tax policy, crypto asset investors have experienced great simplification in tax treatment. Instead of recording and reporting the details of every cryptocurrency transaction throughout the year, they can simply report the current valuation of their portfolio at the beginning of each year, on January 1. This change will undoubtedly greatly reduce the burden of tax treatment for crypto asset investors, allowing them to manage their tax affairs more conveniently.
It is worth noting that the standard tax rate stipulated in this tax policy is 14%. This tax rate is applied specifically to the portion of the appreciation realized by the investor's portfolio during the year, rather than to its overall value. This means that investors only pay tax on the portion of their portfolio's appreciation during the year, rather than on the entire portfolio's value. Compared with the original policy, the tax rate under the alternative value tax policy is significantly more favorable, creating a more relaxed and favorable tax environment for crypto asset investors.
In addition, the implementation of the alternative value tax policy has further enhanced Italy’s international competitiveness in the regulation of crypto assets. By providing a more flexible tax treatment, Italy has attracted more crypto-asset investors to invest, thus promoting the prosperity of the country's cryptocurrency market. Overall, the introduction of the alternative value tax policy is an important innovation by the Italian government in the tax treatment of crypto assets, bringing tangible benefits to crypto asset investors.
4. Updates on Italy’s crypto regulatory framework
The Bank of Italy divides cryptocurrencies into two categories: stablecoins and stablecoins. One category is "unbacked" cryptocurrencies. Compared with stablecoins such as USDT, Bitcoin and Ethereum are considered cryptocurrencies without reserve assets. In view of the particularity of the crypto industry, crypto asset holders are prone to the risk of falling into financial fraud or making unwise investment decisions, and the huge price fluctuations of cryptocurrencies lack their intrinsic value. Therefore, it is particularly important to implement effective supervision of crypto assets. important.
Italy has always maintained a prudent attitude in supervising crypto-assets. In order to strengthen macro-prudential supervision, Italy has taken a series of measures, such as expanding the responsibilities of the already established Macro-prudential Policy Committee to include crypto-assets. Asset field to improve coordination and information exchange efficiency among various crypto asset regulatory agencies. In order to better supervise the cryptocurrency market, the Italian government plans to be jointly implemented by the Bank of Italy and the market regulator Consob. Based on the European regulatory framework, it will impose a fine of 5 million euros (approximately 5.4 million U.S. dollars) to 50 million euros (about 54 million U.S. dollars), thereby maintaining Italy’s financial stability and ensuring an orderly market.
The Italian Government Gazette (Gazzetta Ufficiale della Repubblica Italiana) also published the latest anti-money laundering (AML) rules for cryptocurrency companies in 2022. The AML rules detail registration and reporting requirements for virtual asset service providers (VASPs) and are broadly consistent with the EU’s fifth version of the Anti-Money Laundering Directive and the Financial Action Task Force’s (FATF) guidance for cryptocurrency companies. Under these new regulations, any company wishing to provide digital asset-related services in Italy must register on a specific register. It is worth noting that Italy’s AML rules contain a special requirement that does not fully coincide with the EU’s VASP passport permit system.
Specifically, in order to be eligible to register on Italy’s special register of VASPs, all entities must comply with the relevant provisions of Article 17 of the Italian Directive on Credit Contracts of 2008. Under this provision, VASPs from other EU countries must establish a permanent establishment or stable organization (stabile organizzazione) in Italy, which is usually interpreted by Italian lawyers as requiring the establishment of a branch or subsidiary. Specifically, for those VASPs established in other EU member states, if they wish to cooperate with Italian customers, they must establish a branch or subsidiary in Italy; for VASPs established in a third country, they must Establishment of an Italian subsidiary. In addition to registration requirements, these new regulations require VASPs to report at the end of each quarter all information that complies with anti-money laundering regulations to the agency responsible for overseeing the VASP register (Organismo Agenti e Mediatori). The VASP registry will be formally established within 90 days after the publication of the prescribed documents. Under the dual regulatory framework of registration and reporting, Italy has not only strengthened the supervision of the cryptocurrency market, but also provided strong support for the long-term stable development of the financial market.
5. Summary and Outlook
At the tax system level, Italy has implemented regulations on crypto assets based on a deep understanding of the current tax framework. Capital gains tax policy on disposals and the introduction of an alternative value tax mechanism aimed at reasonably easing the tax burden on cryptocurrency traders. This series of innovative initiatives not only demonstrates the Italian government’s unremitting efforts in building a comprehensive and fair cryptocurrency tax system, but also reflects its firm determination to promote the healthy and sustainable development of the crypto industry. & nbsp; Asset investors create a safe and transparent market environment. In the future, Italy may actively absorb advanced experience in international cryptocurrency supervision and work with countries around the world to jointly promote the progress and development of the encryption supervision system.
We believe that Italy will continue to deepen and improve the tax legal system on crypto assets in the future. This step is an inevitable step for the development of the Italian crypto industry. At the same time, Italy will continue to improve its regulatory system, strengthen the country's regulatory capabilities in this field, and maintain the stability of financial and market order. Italy is moving towards building an environment conducive to the healthy development of cryptocurrency. This move will undoubtedly add new sources of vitality to the country's economic prosperity and sustainable development.
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