Italy's Crypto Tax Regime Evolves with 26% Capital Gains Tax

Italy is gradually aligning with global trends in cryptocurrency adoption, with experts predicting that over 3.6 million Italians will hold digital assets by 2025. As cryptocurrency gains traction, understanding its taxation becomes crucial for both businesses and investors.

The Italian Revenue Agency (Agenzia delle Entrate) is responsible for collecting taxes on cryptocurrencies, adhering to both national and EU financial laws. Recent Budget Laws of 2023 and 2025 have redefined the crypto tax regime in Italy, making it essential to stay updated on these developments.

Agenzia delle Entrate treats cryptocurrency similarly to foreign currency for taxation purposes, affecting how transactions are reported and taxed. Significant changes introduced by the Budget Laws of 2023 and 2025 include a tax option based on portfolio value and an increase in the capital gains tax rate. The Italian tax code mandates annual reporting of crypto gains and foreign investments, with severe penalties for non-compliance.

Italy imposes several types of taxes on cryptocurrencies. Capital Gains Tax (CGT) is applied when crypto is sold or exchanged, based on the value of the holding and transaction history. Income Tax is levied on crypto earned through mining, staking, airdrops, or as salary, ranging from 23% to 43%. A Wealth Tax of 0.2% is applied to crypto held in foreign intermediaries or self-custodied wallets. Stamp Duty is automatically withheld if crypto is in the custody of Italian custodians. New residents face a flat tax of 100,000 euros annually on foreign income, which may include crypto income. Inheritance and Gift Tax may apply based on the type and amount of transferred cryptocurrency assets.

The current capital gains tax rate is 26%, set to increase to 33% from January 1, 2026. There are reports of a potential increase to 42%, though this has not been approved. An alternative proposal suggests an 18% fixed tax on the crypto portfolio value as of January 1, payable in up to three installments. Staking, mining, or payment income can be taxed at 23-43%, while a 0.2% wealth tax applies to cryptos held outside Italian institutions. Losses can be carried forward within five years.

Crypto transactions in Italy are treated differently for tax purposes. Purchasing crypto with fiat is not taxable, while converting crypto to fiat is taxed as capital gains. Crypto-to-crypto swaps are taxable events, but moving between wallets is not. Mining and staking rewards are taxed upon receipt and disposal. Wages or crypto payments are treated as personal income. Airdrops and bounties are taxed at 26% upon receipt and disposal. Creating NFTs is not taxable, but selling them is taxed as capital gains. DeFi lending and yield farming income are taxed at receipt and disposal. There is no confirmed tax relief for lost or stolen crypto.

Italian citizens must declare their crypto holdings and profits annually using tax returns such as Modello 730 (for employees) and Modello Redditi PF (for investors or foreign assets). Form RT is used to declare capital gains, while Form RW reports crypto assets held abroad. The deadlines for filing are September 30 for Modello 730 and October 31 for Modello Redditi. Registered mail late filing until November 30 was permitted for some non-residents. Accurate record-keeping is crucial, including transaction dates, wallet addresses, EUR amounts, and transaction types.

Tax deductions and exemptions include the ability to set losses against gains in the same year and carry them over for five years. Trading losses are deductible, but scams and theft are not clearly addressed. The old capital gains exemption of 2000 Euros expired on December 31, 2024, but remains applicable for old tax years. Gifts to recognized charities can be deductible up to 10% of yearly earnings or 70,000 euros.

The Italian Revenue Agency employs KYC-compliant exchanges, DAC8 automatic information exchange, and blockchain forensics to track transactions. Penalties for non-compliance include fines of 3-15% of the undeclared crypto amount, a fixed fine of 258 euros for late declarations exceeding 90 days, and potential audits, back taxes, and interest for misreporting. Enforcement is aided by the registration of crypto exchanges in Italy with the OAM and local AML and transparency regulations.

The 2025 Budget Law may increase the crypto capital gains tax to 42%, potentially making Italy one of the most taxing crypto countries in the EU. This could discourage crypto investment amid the EU's MiCA (Markets in Crypto-Assets Regulation) harmonization efforts. However, new residents still benefit from tax breaks, and simplified portfolio tax options provide opportunities for high-net-worth individuals and crypto-savvy immigrants.

The taxation of cryptocurrency in Italy is evolving rapidly, affecting millions of investors. Understanding the applicable rates, reporting obligations, and compliance regulations is essential to avoid heavy fines. While tools like Koinly and Blockpit can simplify calculations, consulting a licensed tax professional is highly recommended for personalized tax planning and peace of mind.