Budget Law 2023: regulation of crypto-assets

With Budget Law 2023, crypto-assets have been defined by the Italian tax regulatory system for the first time. 

Within Article 1, paragraphs 126 to 147, they have been in fact referred to as “a digital representation of value or rights that can be transferred and stored electronically, using distributed ledger technology or similar technology”.

The realization of capital gains on cryptocurrencies held by natural persons has been framed by Article 67, par. 1, lett. c-sexies of the Consolidated Income Tax Act (TUIR) as a new category of miscellaneous income, subject to the 26 per cent substitute tax in accordance with Article 5, par. 2 of Legislative Decree 461/97.

This treatment is similar to that of other financial instruments, with the clarification that the capital gain is taxable only if it exceeds Euro 2,000. 

This category of miscellaneous income includes not only capital gains, calculated by subtracting the purchase cost and any capital losses on other cryptocurrencies from the consideration received, or from its normal value, but also other income obtained through redemption, sale for consideration, exchange and holding of crypto assets. 

An exchange between crypto-assets having the same characteristics and functions is not a taxable matter. If the capital losses exceed the capital gains by more than Euro 2,000, the excess may be deducted up to the amount of the capital gains both in the tax period and in the subsequent periods, but not exceeding the fourth, to those in which the capital losses were realised and reported in the tax return.

For corporate income purposes, the Law-maker has included the new paragraph 3-bis in Article 110 of the Consolidated Income Tax Act (TUIR), according to which the positive and negative components resulting from the appraisal of crypto-assets do not contribute to the formation of income for Corporate Income Tax (IRES) purposes - and by extension for Regional Business Tax (IRAP) purposes - regardless of whether they are accounted for in the income statement or not. 

On the other hand, if the cryptocurrencies were sold to third parties, exchanged for other assets (including other crypto-assets) or converted into Italian or foreign currency, they would be included in the taxable income for the period.

As far as indirect taxes are concerned, as of 01 March 2023, crypto-assets are also subject to stamp duty or, alternatively, to a tax on the value of crypto-assets, which largely follows the regulations of the tax on foreign financial investments (IVAFE). Both taxes adopt a proportional rate of 2 per thousand. 

Nevertheless, paragraph 20 of Article 19 of Decree-Law No. 201/2011 remains unaffected, thus fixing the upper threshold of the total tax payable by entities other than natural persons in the amount of Euro 14,000.