The Italian Parliament has officially approved its new budget law, which introduces a comprehensive tax framework for cryptocurrency transactions. Effective from January 1, 2023, these regulations clarify previously uncertain areas and establish clear guidelines for the taxation of digital assets. Articles 31 to 35 of the legislation mark a significant step toward formalizing the crypto market in Italy, aiming to enhance transparency and regulatory oversight.
This move aligns with a broader European trend where governments are increasingly focusing on regulating digital currencies to ensure compliance and protect investors.
Overview of the New Tax Rules
Under the new provisions, cryptocurrencies are explicitly classified as digital assets. This classification triggers tax obligations in two specific scenarios:
- When converting cryptocurrency into fiat currency (e.g., euros or dollars).
- When transferring digital assets to third parties in exchange for goods or services.
The applicable tax rate is set at 26% on capital gains. However, there is an important exemption: if the total capital gains from crypto transactions do not exceed €2,000 in a fiscal year, no tax is due.
It’s important to note that converting one cryptocurrency to another (e.g., Bitcoin to Ethereum) does not qualify as a taxable event. Only transactions involving fiat currency or third-party transfers are subject to the new tax.
How Capital Gains Are Calculated
Taxable gains are determined by calculating the difference between the disposal value (the amount received when selling or using the crypto) and the original acquisition cost. Proper record-keeping is essential—taxpayers must provide documented evidence of purchase prices and related costs. If the cost cannot be verified, the authorities will assume a baseline cost of zero, potentially increasing the tax burden.
Losses can also be accounted for: if capital losses exceed €2,000, they can be carried forward to offset gains in subsequent tax periods. However, this carry-forward is limited to the fourth tax year following the loss.
Inheritance, Donations, and Gifts
The law also addresses transfers of cryptocurrency through inheritance or donation:
- In cases of inheritance, the acquisition cost is based on the value declared for inheritance tax purposes.
- For donations, the cost basis is assumed to be that of the donor.
- Any other transfer to a non-holder is treated as a disposal event, potentially triggering capital gains tax.
Regularization of Previously Undeclared Assets
Many Italian crypto holders had not declared their holdings in previous tax returns. The new law provides a temporary regularization mechanism:
For assets held as of December 31, 2021, that were not declared:
- A penalty of 0.5% per year on the value of the undeclared assets is applicable if no income was generated (i.e., no disposals occurred).
- If disposals did occur, in addition to the 0.5% penalty, taxpayers can regularize by paying a substitute tax of 3.5% on the value of the assets at the time of disposal.
There is also an option to reassess the value of holdings as of January 1, 2023, by paying a 14% substitute income tax. This can be split into three annual installments, with the first payment due by June 30, 2023. Subsequent installments will include a 3% annual interest rate.
👉 Explore tax regularization strategies
Strategic Planning for Crypto Holders
With these new rules, Italian cryptocurrency investors should consider the following:
- Plan major expenses: Using crypto for significant purchases—such as real estate, vehicles, or art—may trigger tax events. Structuring these transactions wisely can help optimize tax outcomes.
- Business use: Entrepreneurs can capitalize crypto assets within their business operations, potentially unlocking corporate advantages.
- Debt repayment: Using cryptocurrency to settle personal or bank debt is considered a disposal and is subject to capital gains tax.
Proper planning and consultation with a tax professional are highly recommended to navigate these changes effectively.
European Context: How Other Countries Tax Crypto
Italy is not alone in introducing clearer crypto taxation rules. Several other European nations have recently implemented similar measures:
- Portugal: Proposed a 28% tax on short-term cryptocurrency gains (held for less than one year) in its 2023 State Budget草案.
- Germany: Published its first nationwide crypto tax guidelines in 2022, offering detailed income tax rules for virtual assets.
This trend indicates a continent-wide shift toward standardizing and legitimizing cryptocurrency markets through fiscal policy.
Frequently Asked Questions
What is the capital gains tax rate for cryptocurrency in Italy?
The rate is 26% on gains exceeding €2,000 per year. Gains below this threshold are tax-exempt.
Are crypto-to-crypto trades taxable in Italy?
No, converting one cryptocurrency to another is not considered a taxable event. Tax is only triggered when converting to fiat or using crypto for payments.
How can I regularize undeclared crypto assets from previous years?
You have two options: pay a 0.5% annual penalty on the asset value if no disposal occurred, or a 3.5% substitute tax on the disposal value if you realized gains. Alternatively, a reassessment option at a 14% substitute tax is available for holdings declared in 2023.
Can I offset crypto losses against gains?
Yes, capital losses exceeding €2,000 can be carried forward to offset gains in the following four tax years.
What records do I need to keep for crypto taxes?
You must maintain accurate records of acquisition dates, purchase prices, and disposal values. Without proof, costs may be considered zero, increasing your taxable gain.
Is donating cryptocurrency taxable?
Yes, donations are treated as disposals based on the donor’s acquisition cost. The recipient may also inherit this cost basis for future transactions.
The introduction of a 26% capital gains tax on cryptocurrency in Italy represents a pivotal moment for digital asset regulation in the country. While it brings clarity and structure, it also underscores the importance of compliance and strategic financial planning for crypto investors. As European nations continue to refine their approaches, staying informed and proactive is essential for anyone involved in the digital currency space.