The new tax regime for crypto-assets in the Italian Budget Law 2023

The Italian Budget Law for 2023 (Law No. 197 of 29.12.2022, which came into force on 1 January 2023) laid out the tax regime for crypto-assets anew.
For these purposes, crypto-assets are defined as "a digital representation of value or rights that can be transferred or stored electronically, using a distributed ledger or similar technology".

Non-entrepreneurs

For non-entrepreneurs, the tax regime of crypto-assets is provided for by the new Article 67(1)(c-sexies) of the Consolidated Income Tax Act (“Testo Unico delle Imposte sui Redditi”), which classifies as miscellaneous income of a financial nature "capital gains and other income realised through the refund or transfer upon payment, exchange or holding of crypto-assets".

This provision also states that:

· such income is not subject to taxation if it is less than, in the aggregate, € 2,000 in the tax period;

· an exchange between crypto-assets having the same characteristics and functions does not constitute a taxable fact.

According to the new Article 68(9-bis) of the Consolidated Income Tax Act:

· capital gains are determined on the basis of the difference between the remuneration received or the normal value of the exchanged crypto-assets and the cost or acquisition value;

· capital gains are added algebraically to the corresponding capital losses;

· if the capital losses exceed the capital gains by more than € 2,000, the excess is deducted in full from the amount of the capital gains of the following tax years, but not beyond the fourth;

· the purchase cost must be documented with certainty and precision by the taxpayer; failing that, the cost is zero;

· income from holding crypto assets received during the tax period is subject to taxation without any deduction.

Capital gains, as determined above, are subject to the 26% substitute tax.

Option for administered and managed savings

Options for the administered and managed savings regimes are expressly allowed for the income under review. In summary, it should be noted that:

· in the administered regime, the client delegates tax compliance to his financial intermediary, while retaining control of the decision on his investments;

· in the managed regime, the client delegates to the intermediary the decision on the investment strategy as well as the tax obligations related to his investments.

Entrepreneurs

The new Article 110 paragraph 3-bis of the Consolidated Income Tax Act provides that, by way of derogation from the valuation criteria provided in general by the same Article 110, the positive and negative components resulting from the valuation of crypto-assets at the end of the tax period, regardless of whether they are recorded in the revenue account.

The criterion of tax irrelevance of crypto-asset valuations also extends to the Regional Income tax.

Tax Monitoring

Crypto-assets have been expressly included among the activities subject to tax monitoring and must therefore be entered in the RW panel of the tax return (new Art. 4 paragraph 1 of Decree-Law 167/90).

Stamp duty and Foreign Financial Asset Value tax

As of this year, crypto-assets will also be subject to Stamp duty and Foreign Financial Asset Value tax at the proportional rate of 2 per thousand.
Stamp duty is due if the crypto-assets are held with a resident intermediary; the Foreign Financial Asset Value tax is due if the crypto-assets are held with a non-resident intermediary or if they are stored on memory sticks, PCs or smartphones.

Redetermination of the value of crypto-assets

For the purpose of determining capital gains and losses on crypto-assets held on 01.01.2023, the value on that date may be taken instead of the acquisition cost value, provided that the aforementioned value is subject to the payment of a substitute income tax of 14%.

The optional regime may apply to each crypto-asset and the substitute tax must be paid in a lump sum (by 30.06.2023) or in instalments (in a maximum of three equal annual instalments, with interest of 3% annually on the instalments following the first).

Regularisation of crypto-activities

A special regularisation procedure for past infringements has been provided for, which can be accessed by natural persons, non-commercial entities and simple and equivalent companies resident in Italy.

The prerequisites for regularisation are the failure to enter the crypto-assets held by 31.12.2021 in the RW panel and the failure to indicate the related income.

Regularisation occurs by payment of:

· a sum of 0.5% of the value of the assets held at the end of each year, or at the time of realisation, by way of penalties and interest, covering tax monitoring violations (always due);

· a substitute tax of 3.5% of the same value (to be paid only if the taxpayer has earned income in the relevant period).

Regularisation is finalised by submitting an application for emersion, the model for which will be approved by order of the Italian Revenue Agency.

It is not possible to regularise crypto-assets that are the result of illegal activities or that have been acquired through the income from illegal activities.