Italy Crypto Tax Guide 2023
Want to know how much tax you'll pay on crypto in Italy? The Italian Parliament have just approved crypto gains tax in the 2023 budget - so your crypto is taxed, but we've got everything you need to know in our Italy Crypto Tax Guide 2023, including crypto Capital Gains Tax, crypto Income tax and how to calculate and report your crypto taxes to the Agenzia Entrate by the 30th of November deadline.
Do you have to pay tax on crypto in Italy?
Yes - crypto, or criptovalute, is subject to tax in Italy. There is limited guidance from the Agenzia Entrate, but crypto may be subject to Capital Gains Tax or Income Tax depending on your transactions.
How much tax do you pay on crypto in Italy?
As announced in the 2023 budget, you'll pay 26% Capital Gains Tax on any capital gains over €2,000. Prior to the 2023 budget, Capital Gains Tax of 26% applied only if your cryptocurrency portfolio’s total value exceeded €51,645.69 for more than seven consecutive days during the financial year. As well as this, you may also be liable to pay Income Tax on any crypto income at a rate of 23% to 43%.
This guide is regularly updated
The Agenzia Entrate is yet to release detailed guidance on cryptocurrency taxation in Italy. We keep a close eye on any updates from the Agenzia Entrate on crypto policies and regularly update this guide to keep you informed and compliant.
5 January 2023: Welcome to your Italy crypto tax guide! (Benvenuto nella tua guida sulle criptovalute in Italia!)
Can the Agenzia Entrate track crypto?
Yes, Agenzia Entrate knows about your crypto.
Although many investors are attracted to crypto due to the anonymous and decentralized nature, the reality is most investors are using at least some centralized crypto exchanges to buy, sell and trade crypto. These exchanges are compelled by European Union directives as financial service providers to put "Know Your Customer" identification processes in place and collect customer data to ensure tax compliance and prevent money laundering.
As well as this, DAC8 - the proposed update to the EU directive on administrative cooperation- aims to extend EU tax transparency rules to cover crypto assets.
Is any crypto tax free in Italy?
Let’s start with the good news… not all your crypto transactions will be subject to tax. There are some specific transactions that are tax free, including:
- Buying crypto with euros
- Holding crypto
- Transferring crypto between your own wallets
An important note, there are a number of transactions with unclear guidance from a tax perspective. Just because no guidance exists doesn’t mean you won’t pay tax on your crypto, instead you should interpret the current tax rules and apply it to your crypto transactions, or better yet, use a crypto accountant to ensure you report your investments accurately and pay the right amount of tax on your crypto.
How is crypto taxed in Italy?
Prior to the 2023 budget, Agenzia Entrate had been less than forthcoming about crypto taxes.
They issued a small amount of guidance in Resolution no. 72/E/2016 stating that gains from trading cryptocurrencies were not considered taxable income. This is due to the lack of speculative nature involved in the transaction. But, if your total balance exceeds €51,645.69 for any more than seven consecutive days during the entire financial year, your profits are then viewed as capital gains and taxed at 26%.
However, in December 2022, the Italian Senate approved new tax rules for crypto gains as part of the budget legislation for 2023. Now, you'll pay 26% on any crypto gains whenever you have gains amounting to more than €2,000.
Interestingly, part of this bill includes an option for a "substitute value tax", where taxpayers may declare the value of their digital asset holdings as of January 1st each year and pay a 14% tax instead. This alternative hopes to incentivize Italians to declare crypto in their tax returns by offering a substantially lower tax rate.
As well as this, there are a number of transactions - like mining and staking - where Agenzia Entrate is yet to release any guidance.
Despite the lack of an official statement, it's unlikely that rewards like these are exempt from tax. We always recommend seeking the advice of a professional accountant, but the general view from tax offices around the world is that mining and staking rewards are general or miscellaneous income and subject to Income Tax upon receipt.
Crypto Gains
So, now you know you may pay 26% tax on crypto gains, but what constitutes a gain?
Well, a capital gain or loss occurs as a result of you disposing of a capital asset - in this instance, crypto assets. Again, Agenzia Entrate hasn’t been all too clear about what constitutes a disposal of a crypto asset, but generally speaking, disposing of a capital asset occurs whenever an asset changes ownership. This means a variety of transactions may constitute a disposal and therefore a capital gain or loss must be calculated, including:
- Selling crypto for EUR.
- Trading one cryptocurrency for another. This potentially includes other kinds of crypto assets like tokens, NFTs or stablecoins.
- Spending crypto on goods or services.
As well as this, Italy also has an inheritance, estate and gift tax which was reintroduced in 2006, after previously being abolished. Though there are a variety of tax three thresholds in place depending on the donor and recipient's relationship, as this tax applies to both money and assets, it may also apply to crypto assets.
Capital Gains Tax Rate Italy
The Capital Gains Tax rate in Italy is a flat 26% tax rate - regardless of your total income.
Crypto tax breaks Italy
As announced in the 2023 budget, you’ll only pay tax on gains over €2,000.
Prior to this budget being confirmed, investors only paid tax on gains if their total balance exceeded €51,645.69 for more than seven consecutive days during the entire financial year.
Crypto losses
Unsurprisingly, Agenzia Entrate has not released guidance on crypto losses specifically, however, capital losses in general are deductible, meaning you can use losses to offset gains from other transactions and reduce your tax liability.
Lost and stolen crypto
Agenzia Entrate has released no guidance on whether crypto lost due to misplaced private keys, scams or hacks would be considered a capital loss and therefore deductible. If this applies to you, you should speak to a crypto accountant to seek advice on whether you may claim this as a capital loss.
How to calculate crypto gains and losses
The responsibility of calculating gains and losses lies with the taxpayer, which means you need to know how to calculate your crypto gains and losses prior to reporting to the Agenzia Entrate.
Fortunately, this is pretty simple and it starts with identifying your cost basis.
Your cost basis is whatever it cost you to buy, or otherwise acquire, your crypto, plus any allowable expenses related to acquiring or disposing of your crypto, for example, gas fees or exchange fees. If you acquired your crypto by other means, for example in a trade, use the fair market value of the crypto in EUR on the day you acquired it instead.
Now you have your cost basis, subtract this from your sale price to calculate your gain or loss. Again, if you otherwise disposed of your crypto - for example, by swapping it - use the fair market value in EUR on the day you disposed of your crypto instead.
Crypto cost basis method Italy
Our example above is correct, but it's pretty simplistic, when in most instances, investors are dealing with many transactions and cryptocurrencies throughout a financial year - and calculating cost basis can get a lot trickier if this is the case.
For example, let's say you owned 3 BTC, all of which you bought for a different price and on a different date. You then sold 1 BTC, how do you know which cost basis to use to calculate your gain or loss?
Well, fortunately, Agenzia Entrate has released guidance on this in Resolution no. 788/2021 stating that investors should use the Last In First Out (LIFO) method. This method assumes that the last unit of a given cryptocurrency you bought is the first unit you sold. So in our example above, you'd use the cost basis for the BTC you purchased last to calculate your gain or loss from selling BTC.
Crypto Income Tax
Personal Income Tax, or Imposta sui redditi delle persone fisiche (IRPEF), is made up of three taxes; national, regional and municipal income tax.
Agenzia Entrate have not clarified whether any crypto may be subject to Income Tax, nor which Income Tax may apply, however, as we mentioned above, the majority of tax offices around the world view mining and staking rewards as income and it would be reasonable to conclude Agenzia Entrate may take the same view.
Income Tax Rate Italy
As such, here's the quick breakdown on Income Tax rates that could potentially apply to crypto.
Most of the IRPEF is National Income Tax. National Income Tax is a progressive tax rate, so the more you earn, the higher rate you'll pay. You can see the rates for 2022 below:
Source: Agenzia Entrate
Meanwhile, regional & municipal income tax rates are much lower. Regional Income Tax varies depending on the region you live in, but is between 1.23% to 3.33%. Similarly, Municipal Income Tax varies depending on where you're a resident, but is between 0% to 0.9%.
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.
With the foundations out the way... let's take a look at a variety of transactions and the kind of tax that may apply.
Tax free crypto transactions
Buying crypto with EUR
Buying crypto with fiat currency like euros is tax free in Italy as you're not disposing of an asset or earning additional income.
However, if you bought crypto with another cryptocurrency - like stablecoins - this would be viewed as a taxable transaction as you'd be disposing of one asset in order to gain another.
Transferring crypto between your own wallets
When you transfer crypto between your own wallets - whether that's between exchanges or non-custodial wallets - you're not making a disposal, so this transaction is tax free.
This said, gas or network fees involved in your transfer may not be as clear from a tax perspective. Agenzia Entrate has no guidance on whether these are allowable fees to add to your cost basis yet, but it's worth highlighting other tax offices that have issued guidance generally do not allow transfer fees as an allowable cost.
Hodling crypto
Waiting for the moon? Holding crypto is tax free in Italy. It's only when you make a disposal that you have a taxable transaction.
Although Italy has a Wealth Tax of sorts in place on foreign financial investments (IVAFE) and foreign assets (IVIE), the former applies only to foreign bank accounts and the latter the current guidance only refers to real estate assets, so it's unlikely either are applicable to crypto assets.
Taxed transactions
Selling crypto for euros
Selling crypto for fiat currency like euros is a disposal of an asset and any gains are subject to Capital Gains Tax at a flat 26% rate.
Trading crypto for crypto
Trading one cryptocurrency for another is a disposal, in the same way that selling crypto for fiat currency is. Therefore any gain you make as a result of disposing of the crypto you traded is subject to 26% tax.
The Agenzia Entrate hasn't released specific guidance on this, but it's very likely that regardless of the kind of crypto asset you're trading - for example, coins, tokens, NFTs or stablecoins - this will all be the same from a tax perspective.
Spending crypto on goods or services
Agenzia Entrate has not released specific guidance on whether spending crypto constitutes a disposal, but the general view on tax offices around the world is that spending crypto is a disposal of an asset. In fact, in most instances where you spend crypto - for example, using a crypto debit card - your payment processor generally converts your crypto to cash in the background in order to process the transaction. As such, it's very likely this transaction will be viewed in the same manner as selling your crypto for fiat currency and therefore any gain would be subject to 26% Capital Gains Tax.
Mining and staking rewards
Agenzia Entrate has not released guidance on whether mining and staking rewards are subject to tax. But a lack of guidance doesn't mean your rewards are tax free.
The general view from other tax offices globally is that mining and staking rewards should be treated as additional or miscellaneous income and therefore investors should pay Income Tax upon receipt based on the fair market value of their tokens in their fiat currency at the time of receipt.
If you have mining or staking rewards, you should consider getting a crypto accountant for bespoke advice for your investments and tax liability.
DeFi investments
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 come down to how your specific DeFi protocols work and the transactions involved. If you have DeFi investments, we recommend you speak with an experienced crypto accountant for bespoke advice on your tax liability.
Gifting crypto
While Italy does have an inheritance and gift tax which applies to assets, it's not clear whether this applies to crypto and there is no guidance currently available.
If the tax applies, you may pay between 4% to 8% tax on transfers of property depending on the relationship between the donor and recipient. However, the gift tax does not apply to some foreign assets, so if crypto is viewed as a foreign asset, the gift tax may not apply at all. You should seek the advice of an experienced accountant if you've gifted (or plan to gift) crypto.
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 2022 tax year, you'll need to file the 730 Form by 30 September 2023.
- 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 30 November the following year. So for example, if you're reporting on the 2022 tax year, you'll need to file the Modello Redditi (and Form RT) by the 30 November 2023.
How to file crypto taxes in Italy
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.
How to calculate and file your crypto taxes with Koinly
Now you know how crypto is taxed and how to calculate and file your taxes with Agenzia Entrate - let’s take a look at how it works with Koinly.
Koinly saves you hours by calculating your crypto taxes obligations for you. Here's how easy it is:
- Sign up for a free Koinly account.
- Select your base country (Italy), currency (EUR) and cost basis method (LIFO).
- Connect Koinly to your wallets and exchanges. Koinly integrates with Binance, Coinbase, Kraken and hundreds more. (See all)
- Let Koinly crunch the numbers. Make a coffee.
- Ta-da! Your data is collected and your Complete Crypto Tax Report is generated!
- To download your crypto tax report, upgrade to a paid plan from €39 per year.
- Send your report to your accountant, or complete your tax return yourself using the figures from your Koinly report.
What records do the Agenzia Entrate need?
Agenzia Entrate are yet to give explicit instructions in regard to record-keeping, but their announcement of a change to crypto gains tax in the 2023 budget shows crypto tax compliance is a key focus for them in 2023 and investors should keep excellent records in the event of an audit. As such, we recommend you keep the following records as a minimum:
- Date of transaction(s)
- Cryptocurrencies involved in transaction(s)
- The kind of transaction(s)
- The amount of crypto involved in the transaction(s)
- The value of the transaction(s) in EUR
- The subsequent gain or loss from the transaction(s)
Many exchanges only keep records for a limited time, making it difficult for investors to manage this requirement without resorting to spreadsheets. However, Koinly can help you keep records easily by storing all your transaction data, so if you ever need it, you can easily export a variety of reports.
The information on this website is for general information only. It should not be taken as constituting professional advice from Koinly. Koinly is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances. Koinly is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.