How much is crypto tax in Italy?
As many countries formulate their policies around cryptocurrency, we aim to keep you up to date on any changes that may affect you. One such country, Italy, is high on the list of countries for expansion for Coinbase and Crypto.com, reports BeInCrypto. Meanwhile, Binance received regulatory approval in Italy earlier this year, allowing them to set up its second European base, according to CryptoPotato.
This article will detail the tax rules around cryptocurrency in the country to give you all the information you need to set up shop as a crypto investor in Italy. While there are no specific regulations regarding cryptocurrency taxation in the country, the Italian government treats most gains made from cryptocurrency as it would from trading any other foreign fiat currency (Forex). This means these are treated as capital gains and income, however, there is a flat tax rate for this type of activity.
Read on to find out more about crypto tax in Italy.
There is a threshold at which any crypto profits would be taxable. This currently stands at €51,000 for crypto assets held for at least seven consecutive days.
What is taxed in Italy right now?
For individuals, the tax system relating to cryptocurrency is relatively simple. Once an individual owns over €51k in cryptocurrency for a week or longer consecutively, any ‘speculative activity’ can be taxed at 26%. Speculative activity seems to be counted as any transactions in crypto made with the intention of profiting from the exchange of one crypto for fiat or another crypto; however, particular examples of what the government would count under this category appear to be hard to find.
Unlike many other countries, there is a flat rate of taxation for anyone holding over €51,000 in crypto and transacting using those assets. This makes it easier for those who need to pay tax on their gains to keep track of what they would need to pay and file their taxes when the time comes.
There is, as such, no specific regulation or taxation on crypto, as profit from these assets is counted as income from capital gains. However, upon filing, the crypto owner must specify their crypto holdings, including the coin they hold and how much. This will likely work in your favor, as it is likely to give tax authorities a more accurate picture of your tax situation and you a more accurate amount of tax that you are required to pay.
What is the tax rate for crypto in Italy?
The simple answer is that there isn’t one, at least not specifically for crypto. The government in Italy classes profits as income, making it eligible for taxation as income under capital gains tax. As previously mentioned, the threshold for taxation is €51k, making taxation for many retail traders out of the question. In theory, taxing profits at the 26% flat rate would still result in €37,000 after tax.
The tax regime for crypto is down to a plan to simplify the country’s tax bands to just two thresholds. This never fully went ahead and has been changed recently; however, the principle remains – that they do intend to, where possible, simplify taxes for citizens.
How to pay taxes on crypto in Italy?
In Italy, you would file your taxes, and this is when you would declare any income made from crypto. It is necessary to declare which cryptos and types of activity you have profited from. Once the amounts of profit are declared, along with how you gained the profit, proceed with the rest of your tax return.
Then, at the end of this process, you should be told how much you owe and be given a method by which to pay. Make sure that you save 26% of profits over the threshold to ensure that you have sufficient funds to pay the amount you are likely to owe.
Even if you have earned under the threshold, there is still a point in filing. By doing this, you avoid being followed up by the tax authorities at a later date. It provides them with the information they need to know.
Italy crypto tax
Italy has no specific tax bands or specific taxes for cryptocurrency or anything related to the blockchain, making this a great place to start your crypto journey or even set up as a trader. Their tax regime is relatively clear and easy to comply with (as much as anything else can be in Italy), particularly for capital gains, which crypto profits would be counted as.
The simplicity with which you can do your crypto taxes in the country makes it a great spot to set up shop. In addition, the treatment of crypto trading as Forex (Foreign Exchange currency trading) means that it is exempt from VAT (Value Added Tax). Meanwhile, if any goods are purchased using crypto in the country, it is only subject to the regular VAT rate.
Italy, while still working to evolve its tax regime, is perhaps one of the best countries to invest and trade crypto in. Its simple flat rate for all crypto profit over €51k means that there is very little to work out. It really isn’t taxing work.
Having one tax threshold makes it easier for professionals and retail traders alike. The only thing to remember is that you have to hold the crypto for at least seven consecutive days for any profit to be taxable, and there is still a need to keep track of the coins that you trade. This information will be required when filing your tax return.
You can find our full Crypto Guide for Italy here, detailing the taxes, information on regulation, crypto business activity, ICOs (Initial Coin Offerings), and more.
Italy is rather preferable to some of its European counterparts due to its low and simple tax rate and its lax attitude towards blockchain as a whole. Perhaps, as crypto ownership grows in the country, these rules may become stricter and less favorable. However, for now, it remains a good place to be as a crypto investor or trader.