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The Italian Budget Law for 2023 introduced significant changes to the tax regime for crypto-assets. These updates align with the evolving landscape of digital assets and aim to provide clarity on their fiscal treatment. The following analysis delves into the key aspects of Circular No. 30/E, issued by the Italian Revenue Agency on October 27, 2023, which provides comprehensive guidance on these regulations.

Definition and Scope of Crypto-Assets

The Budget Law established a specific category of income under Article 67 of the Italian Tax Code (TUIR). Crypto-assets are defined as "a digital representation of value or rights that can be transferred and stored electronically using distributed ledger technology (DLT) or similar technology."

This definition encompasses a broad range of activities involving the holding, redemption, and transfer of digital values and rights via DLT systems. Notably, any capital gains or other income derived from these activities are taxable. The scope includes individuals, non-commercial entities, simple partnerships, and non-resident entities without a permanent establishment in Italy, provided the income is considered produced within Italian territory.

Key Tax Provisions

Tax Rate
Capital gains and other income from crypto-assets are classified as miscellaneous income and taxed at a fixed rate of 26%, consistent with financial investments.

Revaluation Option for Crypto-Assets Held Before 2023
For crypto-assets owned as of January 1, 2023, taxpayers may opt to revalue their acquisition cost by paying a substitute tax of 14%. The full amount or the first installment of this tax must be paid by November 15, 2023.

Voluntary Disclosure for Tax Compliance
To address past non-compliance, the law permits taxpayers to regularize their position by declaring previously unreported crypto-assets. This entails:

• Paying a 3.5% substitute tax on the value of the assets at the end of each year or upon realization.
• Adding a 0.5% annual surcharge for each year as a penalty and interest.

Stamp Duty and Asset Value Tax

• Crypto-asset accounts are subject to a stamp duty of 0.2% annually on their value.
• A separate tax applies to the value of crypto-assets held by Italian residents.

Business Implications

For businesses holding or transacting in crypto-assets, the income from these activities is classified as business income. The valuation of such assets for tax purposes should reflect their fair market value at the fiscal year-end.

Alignment with European and International Frameworks

The regulation is consistent with European directives and the broader international approach to digital finance. Notably, it references the Markets in Crypto-Assets Regulation (MiCA) and the DAC8 Directive, which emphasize transparency and harmonized reporting requirements for crypto-assets across the EU.

Conclusion

The new regime represents a significant step in integrating crypto-assets into Italy's fiscal framework, balancing regulatory oversight with opportunities for market growth. Taxpayers and businesses engaged in the crypto-asset sector are advised to assess their compliance with the updated rules and take advantage of the provisions for revaluation and voluntary disclosure.

This structured approach aims to foster legal certainty and encourage broader adoption of digital assets within a clear and equitable fiscal environment.