The recent position taken by the Italian Revenue Agency (“Interpello 956-39/2018”) is an opportunity that can’t be missed to enhance and share our knowledge on tax matters and encourage a broad comparison between colleagues, customers and investors.

The theme is made even more current by the next declarative deadlines.

In recent weeks, customers are reaching our offices for the 2017 tax declaration (so called “UNICO” and “730/2018”) and some of them are very interested in learning more about investments made in the financial market.

They are particularly curious about new financial tools, such as “bitcoin”.

Before mentioning the tax aspects regarding the subject, we invite you to visit the website: https://coinmarketcap.com/, where you can find a detailed list of the so called “cryptocurrencies”, even Bitcoin (in uppercase we means the specific asset and not the generic set of cryptocurrencies, which we indicate with the lowercase) that is only a very well-known example.

A little while ago the capitalization of this market amounted to: Total Market Cap: $ 417.935.131.437 (it is the indication that you find at the end of the list page in the website we indicated).

It is an impressive figure, which can provide you with the dimension of a phenomenon that is hardly exhaustible in the short term, and certainly destined to represent a significant complement in the portfolio of numerous private and institutional investors.

A world market, not brokered by companies and supervised financial institutions, which has assumed considerable importance.

The capitalization of Bitcoin (“title”) amounts to: $ 156,352,722,960, so around 37% of the total market. What can Abaco do for those (Italian residents) who have invested or intend to invest in cryptocurrencies? Assist them professionally with the many tax obligations.

Let’s go by order:

Professional operators: the activity of intermediation of traditional currencies with bitcoins (and here we mean all virtual currencies), made in a professional and habitual way, constitutes a relevant activity for IVA, IRES and IRAP. 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*.

In order to correctly tax the transaction, it is necessary to obtain specialist advice that ABACO can offer, once the technical aspects of the transaction have been made known: type of wallet used, average value in Euro, type of contract …

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 on the main think tanks active in tax matters, considering that virtual currencies should apply the same principles established for transactions involving traditional currencies. It is the same for the anti-money laundering provisions.

The indication is therefore to fill in the RW table, indicating the Code 14 to Column 3.

This determines a recurrent fulfilment, from year to year, as long as the tax payer does not decide to get rid of the assets held. So, 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, because this tax is applicable to deposits and current accounts of a “banking” nature.

We will return in the next weeks to discuss this topic, which is becoming more and more important considering the many aspects of interest that involves. First of all, there will be a debate about the assimilation of cryptocurrencies to foreign currencies. Secondly, there will be a necessary study of the notion of “key” (private or public) through which it operates on the market, as well as its actual availability. Different tax provisions and obligations derive from these.

We are looking forward to understanding your doubts and we are available to assist you to comply with the rules correctly.

ABACO COMMERCIALISTI ASSOCIATI

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*With the acronym “TUIR” we indicate the “Italian Single Text” in Direct Levies.
A special taxation above financial asset owned abroad.