Italy clarifies the taxation of cryptocurrency payments

In Italy, there is a specific law on cryptocurrencies that came into effect two years ago, but some points are still not entirely clear.

A specific law on cryptocurrencies came into effect in Italy two years ago, but some points are still not entirely clear.

One of these concerned the calculation of taxes on crypto payments, because the law did not specify it in an explicit, evident, and clearly understandable way.

This point was clarified yesterday by the Italian government itself, with an official response to a question from the honorable Giulio Centemero.

Taxes on capital gains from crypto payments in ItalyThe issues were actually two, although to be honest the conclusions reached by the government could have been quite clearly deduced by anyone by putting together the various Italian laws.

The first concerned the possible taxation of crypto payments, even in the absence of capital gains.

The second, however, concerned the taxation of any capital gains deriving from crypto payments.

In both cases, the government confirmed what was already known: in Italy, no tax is applied to cryptocurrency payments per se, but only to any capital gains that may be generated when making a payment in criptovalute.

The government writes: “The simple purchase of goods and services using cryptocurrency, following which there is no realization of any gain, would not fall under a taxable scenario”.

Capital gains on crypto paymentsThe key issue in this case is therefore only related to the potential realization of capital gains.

The government’s response specifically mentions the crypto law approved in Italy at the end of 2022 and entered into force in 2023, according to which in the case of an exchange of crypto-assets with other goods, the difference between the consideration received and the tax value contributes to the formation of income.

In other words, this means that when cryptocurrencies are used to pay for the purchase of a good, and thus the condition of exchanging crypto-assets with other goods occurs, the event is fiscally relevant.

Being fiscally relevant, in the case of realization of capital gains, these are taxable, specifically at 26%, which however starting from January 1, 2026, will be increased to 33%.

To calculate the capital gains when using crypto to pay for the purchase of goods and services, it is necessary to subtract the purchase cost of the crypto from the euro value of the purchased goods, or calculate the profit, starting from the concept that receiving goods or services by paying in cryptocurrencies is a fiscally relevant event.

Therefore, if the value in euros of the goods purchased is equal to or less than the purchase cost of the crypto used for the payment, no capital gains are realized, and therefore taxation does not apply.

The fiscally significant eventsIt should be noted, however, that Italian law specifies that exchanges between cryptocurrencies with the same characteristics and functions are not fiscally relevant.

Therefore, if one uses a cryptocurrency, such as Bitcoin, to purchase another similar cryptocurrency, such as Ethereum, the event is not considered fiscally relevant by Italian law. This means that any capital gains are not taxed.

If instead one sells a cryptocurrency, such as Bitcoin, Ethereum, or similar, to cash in stablecoin redeemable in fiat, such as USDC, the taxation of any realized capital gains is triggered. This criterion also applies to the purchase of goods or services with payment in crypto.

The problem lies in the fact that if cryptocurrencies like Bitcoin or Ethereum are used to purchase goods and services, the purchase cost to be subtracted from the value of the purchased goods for the calculation of any capital gains must be traced back to the first moment when cryptocurrencies were acquired by paying with assets having different characteristics and functions.

This involves a significant difficulty in calculating any capital gains if many transactions have been carried out.

For example, if a good or service is paid in DAI, which is not considered a stablecoin but an asset-referenced token with characteristics similar to cryptocurrencies, the calculation of any capital gains becomes complicated if the DAI were not purchased in fiat currency or stablecoin, but for example through a sale of ETH. And if the previous purchase of ETH was made with a payment in BTC, the situation becomes even more complicated.

In this specific case, one should trace back to the first purchase of cryptocurrencies made in fiat or stablecoin, or other assets with characteristics and functions different from these cryptocurrencies, and do all the calculations. It turns out to be so complicated that it is strongly suggested in these cases to use the appropriate software that has been designed for this type of operations.

All this in fact favors the sale of cryptocurrencies into stablecoin, before proceeding with purchases of goods or services paid in crypto, because proceeding in this way simplifies the calculations of the software.