Italy: Crypto Assets Settlement By 30 November: Substitute Tax On Fiscal Monitoring And Profitability

The deadline for filing the application for regularisation of past violations concerning crypto assets held up to 31 December 2021 is 30 November 2023: the Italian Revenue Agency clarified this with Provision no. 290480 of 7 August 2023, implementing the rules contained in the Italian Budget Law 2023.

Article 1, paragraph 138 and following, of Law no. 197/2022 (Budget Law 2023) set forth a procedure for the regularisation of violations in connection with crypto assets. By Provision no. 290480/2023, the Italian Revenue Agency adopted the models and instructions for regularisation and clarified that the relevant application should be filed by 30 November 2023.

Regularisation may be carried out by individuals, non-commercial entities and partnerships that held crypto assets by 31 December 2021, and relates both to the issue of tax monitoring and profitability: it may be carried out in the event of omitted reporting in the RW return, as well as omitted reporting of income (and any regional and municipal surcharges).

For regularisation purposes:

– if the taxpayer did not realise any income in the tax period, but had cryptocurrencies to report in the RW return, a reduced penalty of 0.5 per cent of the value of the undeclared assets must be paid for each tax period concerned;

– if, on the contrary, the taxpayer earned income during the reference period, regularisation shall be carried out by paying:

(i) a “substitute tax” of 3.5 per cent of the value of the crypto assets held at the end of each tax period and/or upon realisation, and

(ii) a further 0.5 per cent of the same value, by way of penalties and interest on tax monitoring violations.

As for the notion of “realisation”, the instructions to the model provided by the Italian Revenue Agency provide that the value at the time of realisation is the exchange value in Euro at the exchange rate indicated on that date in the platform where the person carried out the transaction.

If the taxpayer needs to rectify or integrate an already submitted application, he/she must, again by 30 November 2023, submit a new replacement application.

It is not possible to regularise assets resulting from illegal transactions or acquired through proceeds from illegal activities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.