Alessandro Stradi
The recent position taken by the Italian Revenue Agency (“Guideline 956-39/2018) has provided us with ample opportunities to share our knowledge on tax matters with regards to cryptopcurrencies here in Italy. During the past weeks, many clients have contacted our offices for the 2017 tax declaration (the so called ‘UNICO’ and ‘730/2018), and expressed an interest in learning more about investments in financial markets. They are particularly curious about cryptocurrencies, such as ‘bitcoin’.
In order to get an idea of the volume of cryptocurrencies nowadays, we invite you to visit the website https://coinmarketcap.com/. Here you will see a detailed list of all cryptocurrencies, including Bitcoin (in uppercase, we refer to the specific asset and not the generic set of cryptocurrencies, which we indicated earlier with lowercase). A little while ago, the capitalization of the market amounted to USD 417,935,131,437. This is an impressive figure and certainly destined to represent a significant proportion in the portfolios of numerous private and institutional investors. This global market, not brokered by companies and supervised financial institutions, has gained considerable importance in recent years. The capitalization of Bitcoin alone amounted to USD 156,352,722,960, around 37% of the total market.
What can XLNC member firm Abaco do for those (Italian residents) who have invested or intend to invest in cryptocurrencies? Our firm aims to assist them professionally with the many tax obligations.
Professional operators: the activity of intermediation of traditional currencies with cryptocurrencies, made in a professional and habitual way, constitutes a relevant activity for IVA, IRES and IRAP taxes. It is therefore subject to customer due diligence, registration and reporting obligations pursuant to Legislative Decree 231/2007; outside of the business activity: the provisions of art. 67, paragraph 1, letter c-ter) of the TUIR[1]. In order to correctly tax the transaction, it is necessary to obtain specialist advice (that our firm can offer), once the technical aspects of the transaction have been made known (e.g. type of wallet used, average value in EUR, type of contract, etc).
For income deriving from transactions on the FOREX market and from Contracts for Difference (the so-called ‘CFD’, financial derivatives contracts), we consider applying the provisions of art. 67, paragraph 1, letter c-quater, of the TUIR. Regarding these operations, a detailed study is required.
Regarding fiscal monitoring (Decree Law 167/90), the Revenue Agency, with an interpretation discussed at this time not only on national economic headlines but also by the main think-tanks active in tax matters, considers that virtual currencies should apply the same principles established for transactions involving traditional currencies. It is the same for anti-money laundering provisions.
The indication is therefore to fill in the RW table, indicating the Code 14 to Column 3. This also determines that there is a recurrent fulfilment, from year to year, as long as the tax-payer does not decide to get rid of the assets held. Therefore, as always, it is important to rely on qualified professionals and experts when managing ‘complex’ financial activities.
Finally, the Agency excludes that these currencies are subject to IVAFE[2], because this tax is applicable to deposits and current accounts of a ‘banking’ nature.
We will return to discuss this topic in the future as it is becoming more and more important considering the many aspects of interest that are involved. We believe that there will be a debate about the assimilation of cryptocurrencies to foreign currencies. Additionally, there will be a necessary study of the notion of the ‘key’ (private or public) through which each cryptocurrency operates on the market, as well as its actual availability, as different tax provisions and obligations will derive from these.
We will certainly monitor all developments in the Italian environment and would be willing and able to assist fellow XLNC members and their clients to understand and comply with the rules.
[1] With the acronym “TUIR” we indicate the “Italian Single Text” in Direct Levies.
[2] A special taxation above financial asset owned abroad.
XLNC MAGAZINE | No. 01 | May 2018