Italy Crypto Tax Guide 2024

How is crypto taxed in Italy? We've got everything you need to know in our Italy Crypto Tax Guide 2024, including crypto Capital Gains Tax, crypto Income tax, and how to calculate and report your crypto taxes to the Agenzia Entrate by the 15th of October deadline.

Do you pay cryptocurrency taxes in Italy?

According to Agenzia Entrate, the tax on cryptocurrencies in Italy is 26% on all gains equal to or greater than €2,000. This is treated as "miscellaneous income".

How much tax do you pay on crypto in Italy?

• You'll pay 26% Capital Gains Tax on capital gains over €2,000

• In some cases, for example, for mining activity or for the creation and sale of NFTs, you might also be required to pay income tax on any income derived from cryptocurrencies at a rate between 23% and 43%.

How is crypto taxed in Italy?

In Italy, capital gains from cryptocurrencies are taxed at a rate of 26% if the capital gains are equal to or exceed €2,000. These gains are considered "miscellaneous income" for tax purposes. This taxation applies to profits made from:

• Converting crypto assets into euros;

• Converting NFTs into another cryptocurrency (e.g., trading NFTs for BTC);

• Purchasing goods or services with crypto assets (BTC, NFTs, and the like).

Stablecoins

Currently, conversions of cryptocurrencies into stablecoins (such as USDT) are subject to debate: in June 2023, the European Regulation (MiCa – Market in Cryptoassets) was approved, which defines a particular category of stablecoin: the E-Money Tokens - EMT). The Revenue Agency, in a circular dated 27/10/2023, stated that conversions of cryptocurrencies into EMT are fiscally relevant but to date, no stablecoin has the characteristics defined at the European level for EMTs, and therefore conversions into USDT should be tax-neutral.

Capital Gains Tax Rate Italy

In Italy, the Capital Gains Tax rate is a flat 26%. However, there's an exemption threshold: gains up to €1999.99 are not taxed.

In some cases, for example, for mining activity or for the creation and sale of NFTs, you might also be required to pay income tax on any income derived from cryptocurrencies at a rate between 23% and 43%.

Crypto Gains Italy

So, now you know you may pay 26% tax on crypto gains, but what constitutes a gain?

A capital gain or loss occurs as a result of the disposal of a capital asset, in this case, a crypto asset. Also in this case, the Revenue Agency has not been very clear about what constitutes the disposal of a Cryptoasset but in general, the disposal of a capital asset occurs whenever an asset changes ownership. This means that a series of transactions can constitute a disposal, and therefore a capital gain or loss must be calculated, including:

• Selling cryptocurrencies for EUR.

• Exchanging one cryptocurrency for an NFT.

• Spending cryptocurrencies on goods or services.

In addition to this, Italy also has an inheritance tax on goods and donations that was reintroduced in 2006 after being previously abolished. Although there are different tax thresholds depending on the relationship between the donor and recipient, since this tax applies to both money and goods, it can also apply to cryptographic resources.

How to calculate crypto gains and losses

The taxpayer is responsible for calculating their own cryptocurrency gains and losses before submitting them to the Revenue Agency, the Italian tax authority. To do this, you must first determine the cost basis, which is the first step in this simple process.

The cost basis for cryptocurrencies is the total of what you paid to obtain them. If you did not purchase but traded your cryptocurrency, use its fair market value in EUR on the day of acquisition. To calculate the profit or loss, subtract the cost basis from the sale price. For non-sale disposals such as swaps, use the fair market value of the cryptocurrency in EUR on the day of the disposal.

Accounting methods for crypto tax in Italy

Although the basic calculation of gains and losses from cryptocurrencies is simple, it becomes more complex with multiple transactions and different cryptocurrencies involved in a financial year. When making multiple purchases of the same cryptocurrency at different prices and dates, determining the correct cost basis for a sale can be difficult.

For example, if you have 3 BTC purchased at different times and prices and you sell 1 BTC, you need to know which BTC cost basis to use to calculate your gain or loss. The Revenue Agency, with Resolution No. 788/2021, guides investors to apply the Last In First Out (LIFO) method in such situations.

According to LIFO, the cost basis of the most recently purchased BTC is used when selling BTC. This method helps to simplify the process of determining which transaction to refer to when calculating gains or losses on cryptocurrency sales.

Crypto losses

According to the updated Italian tax regulations on cryptocurrencies, investors can deduct losses greater than €2,000 from their cryptocurrency investments from their profits, with the possibility of carrying this deduction forward for up to five years. Consequently, the use of a cryptographic loss-harvesting strategy could effectively reduce annual tax liabilities.

Lost and stolen crypto

Agenzia Entrate has not issued any indication on whether cryptocurrencies lost due to misplaced private keys, scams, or hacker attacks are considered a capital loss and therefore deductible, but a report to the competent authorities is necessary. If this is your case, you should talk to a cryptocurrency accountant to seek advice on whether you can claim this loss as a capital loss.

Crypto Income Tax

While most crypto gains over €2,000 are considered “miscellaneous income” and subject to a fixed amount of 26%, it is possible that some of your

cryptocurrencies might be taxed as personal income tax or personal income tax on individuals (IRPEF).

Agenzia Entrate has not clarified whether any cryptocurrency may be subject to income tax, nor which income tax may be applicable. However, as mentioned previously, most tax offices around the world consider mining and staking rewards as income, and it would be reasonable to conclude that Agenzia Entrate may share the same view.

If some of your gains are indeed classified as Personal Income, how much tax will you pay on crypto income? You'll be taxed at the same rate as your regular income tax band. In 2024 this will range from 23% to 43%.

Bitcoin mining tax

In Italy, there are no specific tax guidelines for cryptocurrencies obtained through mining.

• It is likely that receiving mined cryptocurrencies does not involve immediate taxation.

• When selling mined cryptocurrencies, individuals should probably declare them as general income.

• If mining were considered a business, the profits from selling cryptocurrencies might be subject to Italian corporate income tax ranging between 23% and 43%.

• Corporate taxpayers, even if not explicitly guided, might have to pay a tax of 24% on the market value of cryptocurrencies at the time of receipt.

DeFi tax

Agenzia Entrate has not released any guidance on the potential tax implications of DeFi investments. Due to the complicated nature of DeFi investments, much of your potential tax liability will depend on how your specific DeFi protocols operate and the transactions involved.

If you have DeFi investments, it is advisable to talk to a cryptocurrency-experienced accountant for personalized advice on your tax liability.

Crypto staking and lending tax

As with mining, there is no clear guidance from the Revenue Agency on the taxation of staking rewards or lending yields. It is advisable to report them as general income on personal tax returns.

However, staking income could be considered holding income, and thus, when converted into Euros, pay 26% on profits of €2,000 or higher.

Utility tokens tax

Again, we have no specific guidelines from Agenzia Entrate. Here are some tips to consider:

• Income treatment: treat income derived from utility tokens as general income on your tax return.

• ICOs: issuing utility tokens during ICOs is probably not taxable.

• Corporate Tax: token issuers pay corporate tax on income derived from goods or services related to the token.
  

How to calculate crypto income

If you need to pay Income Tax on crypto, you need to know how much you made in fiat currency first. To do this identify the fair market value of the coins or tokens you earned in EUR, on the day you received them. That’s the figure you’ll pay Income Tax on.

Other taxes that might apply to crypto

In addition, Italy also has an inheritance tax on assets and donations that was reintroduced in 2006, after being previously abolished. Although there are different tax thresholds depending on the relationship between the donor and recipient, since this tax applies to both money and goods, it can also apply to crypto resources.

Substitute Tax for Stamp Duty

From 1/1/2023, a substitute tax for stamp duty equal to 2 per thousand of the final value held at the end of the fiscal year or at the end of the holding period is due. It is paid on days of actual possession of the crypto assets. It is paid when, for example, the platform (e.g., Binance) has not operated the withholding for stamp duty, or for all those cases in which the crypto assets are stored in an unhosted wallet. For more details, refer to an expert in the field.

Gifting crypto

When receiving crypto as a gift, no tax is due, but the purchase value of the person who gifted them should be taken as the cost of acquisition..

How to pay no or less crypto tax in Italy

To minimize crypto tax liabilities in Italy:

• Hold your crypto: By not selling, you avoid triggering taxable gains.

• Deduct losses: Deduct losses over profits of €2,000, with the ability to carry forward these deductions for five years.

When to report crypto taxes in Italy

There are a couple of key dates you need to know about for your crypto taxes.

The Italian financial year, or tax year, runs from January 1 to December 31.

According to Italy's Revenue Agency, there are two forms with two different deadlines you may need to submit depending on the nature of your income. These are the Modello Redditi PF or the Modello 730, a simplified income tax return.

• Modello 730: The 730 Form is for individuals with employment income, credits, or deductions to declare or claim. The deadline to file the 730 form is 30 September the following year. So for example, if you're reporting on the 2023 tax year, you'll need to file the 730 Form by 30 September 2024.

• Modello Redditi Return: The Modello Redditi Return is for individuals reporting employment income, tax withheld, capital gains (with supplementary Form RT), or foreign income and assets (with supplementary Form RW). The deadline to file the Modello Redditi and Form RT for capital gains is 15 October of the following year. So for example, if you're reporting on the 2023 tax year, you'll need to file the Modello Redditi (and Form RT) by 15 October 2024.

How to file crypto taxes in Italy

Italian taxpayers must choose between two different forms based on their income type, each with its own filing deadline: Form Modello Redditi PF or Form Modello 730.

• Modello 730 is designated for individuals declaring employment income, as well as any credits or deductions. The submission deadline is September 30 of the year following the income year.

• Modello Redditi PF suits those who need to report employment income, tax withheld, capital gains (requiring additional Form RT), or foreign income and assets (necessitating additional Form RW). For capital gains and the associated Form RT, the filing deadline is October 15 of the subsequent year.

For declaring gains from cryptocurrencies, the relevant form is the Modello Redditi PF.

When is the tax deadline in Italy?

If filing Form Modello 730, the deadline is 15 October of the following year.

If filing Form Modello Redditi PF, the deadline is October 15 of the following year. You’ll need to file your crypto taxes with the Agenzia Entrate by the applicable deadline using the relevant forms. You can do this online through the Agenzia Entrate portal, or using paper forms.

When to pay crypto taxes in Italy?

Generally, crypto taxes in Italy are paid through the individual’s tax return using a “self-assessment” method:

• Two advance payments (June 30 and November 30 of the current year).

• One final tax balance (June 30 of the following year).

Amounts due are as follows:

• First advance payment = (100% of the income tax balance of the previous year) x 40%.

• Second advance payment = (100% of the income tax balance of the previous year) x 60%.

• Balance = Actual income tax - Advance payments.