2024 Italian cryptocurrency tax end polar guide

Author: Tom Jarvis, Source: TAXDAO

The rapid expansion of blockchain technology and the extensive adoption of encrypted assets in the world have brought a series of problems to regulators.In essence, the financial law of many jurisdictions has decades of development, providing specific tax frameworks for investors, employers, employees, and other individuals living in the country.

However, blockchain technology is designed for cross -border borders, and due to the nature of assets, cryptocurrencies are not suitable for most existing frameworks.Therefore, it is not easy to find out which tax laws are applicable under different circumstances, because each judicial area is slightly different when levying cryptocurrency profits.

This article will conduct in -depth types of tax types applicable to Italian cryptocurrency investors, including factors that trigger taxable incidents, possible tax rates, and when to pay these taxes.

Therefore, drinking a cup of coffee and remained sober. The tax reporting season may be one of the most dry periods of the year, but Italian residents must fully understand their taxpays so that they can avoid any legal consequences over time.I hope this article can provide all information about the Italian encryption tax that you need to know.

Key points:

• It was introduced by Italy in early 2023, a new cryptocurrency tax payment method, which means that there are currently two main encrypted taxes in the country;

• Personally, you can choose which cryptocurrency duty to pay, because they can declare income in the annual tax declaration form, or they can declare the value of their cryptocurrency investment portfolio on January 1 each year;

• Two types of encryption taxes in Italy are capital benefits and alternative value tax;

• The unified tax rate of capital benefits is 26%;

• The unified tax rate for replacement value tax is 14%;

• Any transaction involving digital asset transfer may cause taxable incidents in Italy;

• Any profit at the starting point of more than 2,000 euros in the fiscal year is regarded as taxable income;

1 The type of crypto asset recognized by Italy

In 2023, Italy launched a new set of taxation for cryptocurrencies.Although the country provides limited guidance compared to other jurisdictions such as India, Italy now sets various thresholds for capital benefits tax rates for processing crypto assets.

Nevertheless, considering that there is no definition of any narrow sense, the types of crypto assets recognized by Italy are quite extensive.In essence, in Italy, any type of digital assets have any profits obtained during the period of time.

all in all:

• In Italy, stablecoin, NFT, Governance tokens, utility tokens and any other types of encrypted assets are considered to pay capital gains tax.

• Italy does not provide a tax framework for crypto assets earned through mining or pledge, which means that they may belong to the same category as other crypto assets and are considered “miscellaneous income”.

2 The type of encryption tax you need to know

The Italian Government Taxation (Agenzia Entrate) passed a special tax law for cryptocurrencies in the 2023 budget announcement.All the profits obtained in cryptocurrencies worth more than 2,000 euros now need to pay capital benefits or income tax, which depends on the type of transactions performed by the owner.

This marks a major change compared with the past. In the past, only when the personal investment portfolio was worth more than 51645.69 euros, the profit of the ownership of cryptocurrencies was taxed.At present, individuals who have a profit of more than 2,000 euros need to apply for cryptocurrency income as miscellaneous income in the annual tax declaration form, and then the amount must be paid for capital benefits.

Another change during the 2023 budget announcement was the introduction of “alternative value tax”, which inspired cryptocurrency owners to declare its investment portfolio value at the beginning of the year.The replacement value tax provides a lower tax rate for all encrypted asset owners who declare the value of investment portfolio on January 1st each year.

Therefore, you need to know the two main encryption tax:

• Capital gain tax

• Alternative value tax

2.1 Capital gain tax (applicable to you when you dispose of encrypted assets)

In Italy, all more than 2,000 euros’ profits need to pay capital profit tax.Capital profits are levied at a unified tax rate of 26%.

Italy does not specify the type of taxation of crypto assets, which means that as long as the profit exceeds the threshold, all blockchain -based digital assets will be treated equally.Similarly, there is no difference between transaction profit, mining earnings or pledge income.In essence, any income of more than 2,000 euros will pay 26%of capital benefits.

However, the taxable incident will only be triggered after disposal of encrypted assets, which means that according to Italian law, the income without realization does not require tax.The income is defined as the positive difference between the price of the sales point and the purchase point price, so the capital gain tax is only applied after the encrypted assets owned are sold or exchanged.

The following transactions may be classified as taxable incidents in Italy:

• Sell ​​encrypted assets in exchange for legal currencies

• Exchange one cryptocurrency into another cryptocurrency

• Use cryptocurrencies to purchase goods and services

• Receive cryptocurrencies as payment as goods and services

• Receive cryptocurrencies as gifts

• Use special devices or software to dig cryptocurrencies

• Receive the salary of degraded currency pricing from the employer

• Earn income through pledge and encryption assets

• Receive airdrops denominated by cryptocurrencies

• Cryptocurrencies generated by selling investment to obtain profits

The sale of cryptocurrencies in Italy in exchange for legal currencies will trigger taxable incidents.The tax is only suitable for the profit obtained during the period of ownership, not the total value of the time.When the total annual profit is more than 2,000 euros, the capital profit tax rate is 26%.This is similar to British encryption tax and German encryption tax. Both countries hope that the owners of encrypted assets will pay capital profit tax when selling assets.

Exchange cryptocurrencies with cryptocurrencies

In Italy, it is also a taxable activity to exchange one cryptocurrency into another cryptocurrency.For example, this can be suitable for exchanging Ethereum to Tether (USDT), or use Solana (sol) to buy NFT.26%of the capital gain tax will be applied to any profit obtained during the asset ownership used in the first part.

Spend goods and services or receive cryptocurrencies

The use of encrypted asset payment products and services are classified as taxable incidents.In other words, the sales price is reduced from the purchase price and 26%of the remaining part is levied on the remaining part.

Gift cryptocurrency

Giving cryptocurrencies to another person means that the taxpayer has now transferred to the receiver.This means that the receiver should record its ownership of encrypted assets when receiving a gift, and once it is sold or exchanged gifts, any profit obtained will pay capital benefits in Italy.

2.2 Replacement value tax (can be used to reduce the cryptocurrency tax of Italy)

Usually in Italy, all income from crypto assets must be declared in the annual tax declaration form.From then on, the profit of more than 2,000 euros will pay capital benefits at a unified tax rate of 26%.However, the replacement value tax was introduced in early 2023, which aims to inspire cryptocurrency owners to declare its investment portfolio value by providing a lower tax rate.

The operation method of alternative value tax is slightly different from traditional capital gains tax, but the core principles are the same.Individuals do not need to record all cryptocurrency transactions per year and declare on the income tax declaration form. It only needs to declare the value of its investment portfolio on January 1 each year.

The replacement value tax is significantly lower, and the unified tax rate for encrypted assets is 14%, not 26%of the capital income.Like capital benefits, these 14%do not apply to the total value of the investment portfolio, but applies to the profits obtained during all periods.Therefore, if individuals buy a Bitcoin (BTC) worth 15,000 euros in September, the investment portfolio on January 1 is 20,000 euros, and the 14%tax is applied to the profit of 5,000 euros.

3 How to calculate Italian encryption tax

3.1 Calculate Capital Profit Tax

Use a simple formula to calculate the capital profit tax that Italy has paid.The calculation method of capital income is to minimize the value of given assets from the value of purchase at the time of sale, and deduct 26%of the unified tax rate (if there is a positive difference) from the remaining amount, that is:

• Capital income = cryptocurrency sales price -cryptocurrency purchase price

• Capital gain tax = 26% of capital gains

Take a single transaction as an example:

• One person purchases 100 SOL at 20 euros, and then exchanged for USDT when it is worth 40 euros

• Purchase cost = 2,000 euros

• Value for sale = 4000 euros

• Capital profit tax = 26% of profit profits

• That is, 26% of 26% = 520 Euros

3.2 Common questions

How to monetize cryptocurrencies without paying taxes in Italy?

Italy requires all residents to pay taxes for their cryptocurrency income.Whether you make a profit through cryptocurrency transactions, obtain cryptocurrency mining rewards or through cryptocurrency lending, you need to pay capital profits taxes in Italy.As a result, cryptocurrencies may be punished without tax in Italy.Through appropriate financial planning, the amount of encryption tax may be reduced.

Is it to pay taxes for cryptocurrency income in Italy?

Yes, in Italy, the profit tax rate of allocate assets worth more than 2,000 euros must be paid, and the tax unified tax rate is 26%.

When do I need to pay the cryptocurrency tax in Italy?

According to the application method, there are two types of encryption taxes in Italy.If an individual chose to declare its cryptocurrency income in the annual tax declaration form, the profits earned from crypto assets need to pay capital benefit taxes.Alternatively, if individuals choose to declare the value of their investment portfolio on January 1st, then only need to pay the replacement value tax.

Italian residents need to submit the tax declaration form to the time limit. Paper documents should be submitted before June 30, and the digital tax declaration form should be submitted by November 30.

How to tax in Italy?

Italy launched a new cryptocurrency tax regulation in early 2023.As part of the new regulations, if the value of the cryptocurrency investment portfolio is declared on January 1st each year, it can tax cryptocurrencies at the tax rate below traditional capital gains.Otherwise, the profit earned from cryptocurrencies will be affected by capital returns and should be declared in the annual tax declaration form.