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Italian tax authorities treat cryptocurrencies similarly to foreign currencies. As a result, proceeds from speculative exchanges between cryptocurrencies or from cryptocurrencies to fiat currencies are subject to the standard rules applicable to income arising from trades of foreign fiat currencies. These rules also apply to “proceeds arising from trades of utility tokens.” The market value of cryptocurrencies must be reported annually “as if the same assets are held abroad by Italian resident individuals/non-commercial entities (the omission is potentially subject to a penalty ranging from 3% to 15%).” Certain cryptocurrency exchange services are exempt from value-added tax (VAT), as are standard services relating to foreign currencies. However, the receipt of new tokens via mining is subject to VAT. In short, all profits from cryptocurrencies are taxable but crypto transactions themselves are not.

I. Introduction

Italian tax authorities treat cryptocurrencies similarly to foreign currencies.[1] As a result, proceeds from speculative exchanges between cryptocurrencies or from cryptocurrencies to fiat currencies are subject to the standard rules applicable to income arising from trades of foreign fiat currencies.[2] These rules also apply to “proceeds arising from trades of utility tokens.”[3] The market value of cryptocurrencies must be reported annually “as if the same assets are held abroad by Italian resident individuals/non-commercial entities (the omission is potentially subject to a penalty ranging from 3% to 15%).”[4]

Certain cryptocurrency exchange services are exempt from the value-added Tax (VAT), as are standard services relating to foreign currencies.[5] However, the receipt of new tokens via mining is subject to the VAT. In sum, all profits from cryptocurrencies are taxable, but not crypto transactions themselves.[6]

Recently, domestic availability of cryptocurrencies in Italy has seen a steep increase, as local banks have made access to Bitcoin easier for millions of Italians, including companies and businesses in financial markets.[7] It has been reported that “about 350 businesses in the retail and foodservice sectors . . . are accepting cryptocurrency payments, totaling 270 Italian retailers and 214 service providers.”[8] In addition, there are about 17 Bitcoin automated teller machines (ATMs) throughout Italy, with Milan having the “highest number of cryptocurrency ATMs.”[9]

In an effort to fight illegal trading in products and services, the Italian securities regulator (Commissione Nazionale per le Società e la Borsa, CONSOB) has shut down “six foreign exchange websites and two crypto investing and derivative trading sites.”[10]

However, and in general terms, Italy is actively taking steps to “possibly become one of the most crypto-friendly venues among the bigger European countries.”[11]

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II. Conceptual Framework

Currently, no comprehensive legislation on cryptoassets or cryptocurrencies, or their taxation, exists in Italy. Tax authorities “apply the existing income tax and reporting rules generally applicable to foreign currencies.”[12]

A. Virtual Currencies (Cryptoassets) as Foreign Fiat Currencies

For tax purposes, Italy considers virtual currencies (cryptoassets) as foreign fiat currencies.[13] Italy is among the few countries that “do not consider any exchanges made by individuals to be a taxable event for the holder of the virtual currency,”[14] unless they are considered to be speculative,[15] as will be explained below.

B. Income Tax Treatment of Revenue from Cryptocurrency Transactions

Concerning corporate taxation, the Italian tax authorities have determined that the profits deriving from cryptocurrency trading are relevant for the purposes of corporate income tax (Imposta sul Reddito sulle Società) and the Italian regional production tax (Imposta Regionale sulle Attività Produttive), and such profits must be included in a company’s financial statements.”[16]

With respect to personal income tax, “the profits generated by the trading of crypto assets are regarded as those deriving from FOREX [foreign exchange] trading for personal tax purposes.”[17] As a result, “in their annual tax return, individuals residing in Italy must specify whether they have any cryptocurrencies held in e-wallets, just as they have to declare if they have money held in foreign bank accounts.”[18]

Revenue from speculative transactions in cryptocurrencies is subject to the same rules applicable to income stemming from exchanges in foreign fiat currencies, that is, a flat 26% substitutive tax for Italian resident individuals, and it is also subject to the standard corporate income tax for businesses.[19] Transactions in cryptocurrencies are deemed speculative in the following situations:

(a) “when during the fiscal year and for at least seven consecutive days, the threshold of ownership of virtual currencies exceeds circa €51,000 (about US$61,000);”

(b) “if the profit from trading exceeds €51,646 (about US$61,739) for seven consecutive days;” and

(c) “companies subject to corporate income tax must pay taxes on the exchange movements between virtual currencies and fiat currencies.”[20]

As a result, in Italy the disposal of the token for goods and services does not give rise to a taxable event for the owner of the virtual currency,[21] as this country does “not consider any disposals to be a taxable event in relation to the token.”[22]

C. VAT Treatment of Virtual Currencies in Italy

In Italy, the exchange of virtual currencies is not subject to VAT,[23] whether the exchange “is made for fiat currency or other virtual currencies.”[24] The use of virtual currencies to acquire goods or services is also outside the scope of VAT.[25] However, the receipt of new tokens via mining is subject to the VAT.[26]

D. Criticism of the Current Tax Treatment of Cryptocurrencies

Tax experts raise the criticism that the “Italian standard tax rules applicable to fiat currency are not fit for cryptocurrencies, which are extremely volatile, far from being generally accepted as means of payment and often hard to convert to fiat currency (due to the money laundering concerns shared by the vast majority of the financial institutions).”[27]

Critics also point out that “eventually this could result in a burdensome taxation on an accrual basis rather than on a cash basis (as it is instead for fiat currencies).”[28] In addition, experts point out that “annual reporting duties generally applicable to (financial) assets held abroad are in contrast with the nature of crypto-assets, which are everywhere and nowhere.”[29]

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III. Legislative and Regulatory Framework Relevant to Cryptocurrency Transactions

A.  Law No. 58 of 2019

Law No. 58 of 2019 created a ”FinTech Committee” at the Ministry of Economy and Finance, composed by representatives of that ministry, the Bank of Italy, CONSOB, the Italian Competition Authority, the Data Protection Authority, the Digital Italy Agency, and the Italian Tax Authority.”[30] The FinTech Committee’s task is to identify “specific objectives, defining action plans and taking appropriate measures to facilitate techno-finance, also by way of cooperating with foreign partners, proposing statutory measures and acting as a liaison officer between industry players and the government.”[31]

B.  Legislative Decree No. 90 of 2017

Legislative Decree No. 90 of 2017 subjected virtual currency providers to the regulations established for traditional money exchange operators.[32] To that effect, Legislative Decree No. 90 charged the Ministry of the Economy and Finance with issuing a ministerial decree setting forth the modalities and timelines for the legal performance of such activities throughout the country.

Legislative Decree No. 90 contains the following definitions:

  • Service Providers related to the Use of Virtual Currency: Any natural or legal person who provides to third parties, on a professional basis, services functional to the use, exchange, conservation of value (storage or deposit) of virtual currencies and their conversion from or into legal tender currencies;[33]
  • Virtual Currency: The digital representation of value, not issued by a central bank or public authority or necessarily linked to a legal tender currency, that is used as a means of exchange for the purchase of goods and services and that is transferred, archived and electronically negotiated;[34] and
  • Other Non-Financial Operators: Providers of services relating to the use of virtual currencies, limited to the performance of the conversion of virtual currencies from or into fiat currencies (valute aventi corso forzoso).[35]

Regulations imposed on traditional money exchanges also apply to cryptocurrency exchanges, giving cryptocurrencies the same treatment with foreign currency.[36]

Experts have criticized the legal definition of cryptocurrencies provided by Legislative Decree No. 90 as the “digital representation of value not issued by a central bank or public authority,”[37] since foreign currencies are fiat and, therefore, centralized and taxable.[38] An additional criticism is that “assets kept in cryptowallets are not taxable since they are not foreign accounts.”[39]

Despite its shortcomings, the mandatory registration of firms dealing with cryptocurrencies is forecast to “ease tracing in cases of money laundering, terror financing, and other illicit activities.”[40]

C.  Ministerial Resolution of 2016

A 2016 ministerial resolution issued by the Revenue Agency (Agenzia delle Entrate) regulates certain aspects of the tax treatment of bitcoin and other cyber currencies and, in particular, implements a European Court of Justice decision,[41] which held that no VAT “can be imposed on the exchanges of crypto to fiat and vice versa.”[42] Therefore, any transaction involving the exchange of crypto assets against fiat would not be taxable but, as explained above, for income tax purposes profits are taxable and losses are deductible on these transactions.[43] 

D.  Implementation of Anti-Money-Laundering (AML) Directive (EU) 2018/843

In 2019, Italy implemented EU Directive 2018/843,[44] and since then “cryptocurrency exchanges and service providers are subject to the standard customer due diligence and related reporting duties on suspicious transactions.”[45] Also in 2019, it was reported that the Italian Ministry of Finance was considering “establishing a special registry to collect information from the market for cryptocurrencies in Italy.”[46]

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IV. Pending Bills on Cryptocurrencies

A. Bill of 2020 (Decreto Semplificazioni)

On February 7, 2020, the Italian Parliament approved the crypto regulation bill, defining blockchain technology and distributed ledger technologies. As of July 2020, the Digital Italy Agency was preparing specific technical standards for the legal compliance of smart contracts.[47]

B. Cryptocurrencies Bill of 2016

Under a bill regarding cryptocurrencies introduced in the Italian Parliament in 2016,[48] the government would:

  • Forbid the use of total anonymization techniques in transactions in relation to payers, payees, and the amount of the transaction;[49]
  • Allow the use of cryptocurrencies that involve total anonymization techniques only when they are equipped with mechanisms for recognizing outgoing conversion transactions, as long as they are available to the national judicial authorities in a manner established by law;[50]
  • Prohibit the establishment of cryptocurrency exchange service providers with total anonymization as well as the offer, promotion, or facilitation of access, in any way, to currency exchange services with total anonymization that have been established abroad;[51]
  • Permit the operation of suppliers and the offer of foreign exchange services only when these are equipped with mechanisms for recognizing outgoing conversion transactions, as long as they are available to national judicial authorities in a manner established by law;[52]
  • Require pseudonym cryptocurrency changers to block any conversion into another cryptocurrency coming from anonymization services included in a list established in the law, and to inform the competent supervisory bodies of the identification details of the subjects requesting the money-changing operations;[53]
  • Require the competent authority established by a ministerial decree to publish and keep updated, in collaboration with international organizations having a similar role, the list of the anonymization services of pseudonym cryptocurrencies;[54]
  • Mandate the Ministry of Economy and Finance to issue a special decree containing operating instructions for the planning and control, by the competent supervisory authorities, of the use of cryptocurrencies with total anonymization that differ from those mentioned in the bill, in order to counter their use and dissemination, as well as to regulate the exercise, offer and promotion of pseudonymous cryptocurrency anonymization services that differ from those established in the bill;[55] and 
  • Establish penalties of fines and imprisonment for the violation of prohibitions related to cryptocurrencies.[56]

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V. Conclusion

The taxation regime in Italy for decentralized cryptocurrencies like Bitcoin is unclear. As a former economy and finance minister has put it:

It’s the future and you cannot stop it. Having said that, Bitcoin does not have a clear legal status, and this is clearly an obstacle. According to accounting rules, it’s an asset you should put on your financial statements. But if it’s an asset that you should put on your financial statements, should VAT be applied when it is sold? It is still an area of great uncertainty.[57]

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Prepared by Dante Figueroa
Senior Foreign Legal Analyst
January 2021


[1] Giorgio Vaselli, Italy: Italy's Tax Treatment of Cryptocurrencies: The Risks and Opportunities, Mondaq (Oct. 30, 2019), https://perma.cc/T37Q-WJHV.

[2] Giorgio Vaselli, Italy’s Tax Treatment of Cryptocurrencies: The Risks and Opportunities, Block (Apr. 29, 2019), https://perma.cc/NC28-2PMF.

[3] Id.

[4] Id.

[5] Id.

[6] What We Need to Know about Crypto Regulation in Italy, eQapital Banq (July 17, 2020), https://perma.cc/HG24-666W.

[7] Id.

[8] Id.

[9] Id.

[10] Ting Peng, Italy’s Securities Regulator Shuts Down 8 Crypto Trading and Foreign Exchange Sites, Cointelegraph (Feb. 10, 2020), https://perma.cc/JH5H-Q2MB.

[11] Massimo Donna & Lavinia Carmen Di Maria, Blockchain & Cryptocurrency Regulation 2021 / Italy, Global Legal Insights, https://perma.cc/2STN-5K96.

[12] Vaselli, supra note 1.

[13] OECD, Taxing Virtual Currencies: An Overview of Tax Treatments and Emerging Tax Policy Issues 15 (2020), https://perma.cc/NS3N-BNQR.

[14] Id. at 27.

[15] Id. at 28.

[16] eQapital Banq, supra note 6.

[17] Id.

[18] Id.

[19] Id.

[20] Id.

[21] OECD, supra note 13, at 30.

[22] Id.

[23] Donna & Di Maria, supra note 11.

[24] OECD, supra note 13, at 39.

[25] Id.

[26] Id.

[27] Vaselli, supra note 1.

[28] Id.

[29] Id.

[30] Id.

[31] Id.

[32] Decreto Legislativo 25 Maggio 2017, N. 90 Attuazione della Direttiva (UE) 2015/849 Relativa  alla Prevenzione dell’Uso del Sistema Finanziario a Scopo di Riciclaggio dei  Proventi di Attivita' Criminose e di Finanziamento del  Terrorismo  e  Recante Modifica delle Direttive 2005/60/CE e  2006/70/CE  e  Attuazione  del Regolamento (UE) N.  2015/847 Riguardante i  Dati  Informativi che Accompagnano i Trasferimenti di Fondi e  che  Abroga  il  Regolamento (CE) n. 1781/2006 (Legislative Decree No. 90), G.U. June 19, 2017, n.140, https://perma.cc/CVD3-G7XZ.

[33] Id. art. 1(2)(ff).

[34] Id. art. 1(2)(qq).

[35] Id. art. 1(5)(i).

[36] eQapital Banq, supra note 6.

[37] Donna & Di Maria, supra note 11.

[38] eQapital Banq, supra note 6.

[39] Id.

[40] Id.

[41] Case C-264/14, Skatteverket v. David Hedqvist, ECLI:EU:C:2015:718, http://perma.cc/7Q6Q-MM9V.

[42] eQapital Banq, supra note 6.

[43] Vaselli, supra note 1.

[44] Decreto Legislativo 4 ottobre 2019, No. 125 Modifiche ed Integrazioni ai Decreti Legislativi 25 Maggio 2017, No. 90 e No. 92, recanti Attuazione della Direttiva (UE) 2015/849, nonche’ Attuazione della Direttiva (UE) 2018/843 che Modifica la Direttiva (UE) 2015/849 relativa alla Prevenzione dell’uso del Sistema Finanziario ai fini di Riciclaggio o Finanziamento del Terrorismo e che Modifica le Direttive 2009/138/CE e 2013/36/UE, G.U. Oct. 26, 2019, n.252, https://perma.cc/K6EV-9ZZW.

[45] Vaselli, supra note 1.

[46] Id.

[47] eQapital Banq, supra note 6.

[48] Proposta di Legge 4119 del 26 Ottobre 2016, Divieto di Utilizzo delle Criptovalute che Impiegano Tecniche di Anonimizzazione Totale nelle Transazioni Economiche (Bill No. 4119 of October 26, 2016, Prohibition of Use of Cryptocurrencies Using Total Anonymization Techniques in Economic Transactions), Chamber of Deputies, XVII Legislature,  https://perma.cc/XMQ4-EPEL.

[49] Id. art. 1(1).

[50] Id. art. 1(2).

[51] Id. art. 2(1).

[52] Id. art. 2(2).

[53] Id. art. 3(1).

[54] Id. art. 3(2).

[55] Id. art. 4(1).

[56] Id. art. 4(3).

[57] Statement by former Minister of Economy and Finance Giulio Tremonti, quoted in Peng, supra note 10.

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Last Updated: 02/05/2021