Italian Tax Agency Releases Bitcoin Tax Guide

Recently, the Italian Tax Agency (Agenzia delle Entrate) published a new document titled “Bitcoin and Digital Currency Transactions: Clarification of Tax Treatment”, which describes how VAT is applied to digital currency transactions.

The document states:

“Market participants who use virtual currencies to carry out traditional monetary intermediation activities will be exempt from VAT as they involve transactions in banknotes and coins.”

In Italy, you can use Bitcoin to pay for many things, including playing tennis at a tennis club, buying paintings, staying in a hotel, buying breakfast, hiring a lawyer, etc. You can use Bitcoin to buy a lot of things you need, especially in the fields of travel and computers.

Individual Bitcoin users

The document sets out different rules for different users (individuals and companies). According to the latest guidelines of the European Court of Justice, the document resolution clearly states that for individual users, holding Bitcoin outside of business activities is considered spot trading, and because it lacks speculative purposes, the income generated does not need to be taxed.

Antonello Gaviraghi, a business consultant and tax advisor, explained to CoinTelegraph:

“Regarding the gains of individual users, the resolution stipulates that they are not for speculative purposes and therefore not taxable. However, this interpretation also applies to the seizure of small amounts of Bitcoin. The conditions for taxation are met only if an individual deposits foreign currency in his account exceeds 51.64569 euros for at least seven days.”

Companies holding Bitcoin

Compared to individuals, the tax agency’s resolution stipulates that intermediaries’ income from Bitcoin transactions needs to pay taxes to IRAS and IRAP.

Gaviraghi explained that this resolution is a disadvantage for business because companies need to pay taxes on unrealized capital gains or losses.

He noted:

“Any unrealized capital gains or losses will be taxable at the end of the year, which is bad news for companies that hold Bitcoin because they will need to pay taxes on unrealized profits, but these are just estimates.

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