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Italy has been hard pushing the whole country towards digital transformation over the last years, as the country is currently one of the least digital countries in the EU. Blockchain in Italy is still at an embryonic stage and the law still has a lot to cover, but efforts have been made in this sense.
Back in 2019, Italy defined for the first time what a distributed ledger technology is, obviously trying to give it a standard, universally recognised description, which could still be subject to changes along with the evolution of DLTs.
Since then, steps have been taken to regulate cryptos, smart contracts and blockchain transactions.
Current status of cryptos in Italy
Unlike DLT, cryptocurrencies still don’t have a legal definition, because regulators are still discussing if they should be considered currencies or assets. It might sound like a small detail, but it isn’t, as defining cryptos as currencies could open some loopholes in regards to their status as legal tender.
At the moment, the dominant approach is that cryptos are treated like foreign currencies, so they can be exchanged for fiat currency or between each other at the rate available when the transaction is performed.
Please, note that this is not an official regulation, but it’s the effect of the ruling of a court judge back in October 2020.
Actually, the majority of the work to regulate cryptos and other Blockchain applications is far from done, with courts ruling case by case, hence creating precedents.
Another example of court ruling on a legislative void is when Corte di Cassazione defined Bitcoin trading as financial activity, therefore indicating bitcoins as financial tools. In this specific case, occurred in 2019, some bitcoins held in a wallet were considered fungible goods.
There’s a tendency to think cryptos as assets, rather than currencies, even though some judges ruled differently. This means that cryptos can be traded in any transaction that accepts both money and assets as a payment.
AML-wise, the current regulations in Italy never mention cryptos directly, but they talk about them as virtual currencies, a broad definition which also includes other digital assets.
Taxation on cryptos in Italy
Taxation of cryptos hasn’t been regulated yet, leaving Agenzia delle Entrate, the Italian Government’s taxes agency, the burden. What we know so far is:
- Cryptos are VAT-exempt;
- Revenues generated by trading cryptos must be declared by businesses and included in the corporation tax;
- Earnings from cryptos are equivalent to earnings from forex trading for all individuals and they’re exempt as long as the total sum of cryptos held is lower than about 50,000 euros (exact figures updated yearly).
Smart contracts
According to Italian regulations, a contract must be in written form, the parties must be identifiable and the subject must define an economic transaction.
This meand that smart contracts are generally recognised by the Italian law, but specific guidelines haven’t been stated yet.
Trading cryptos in Italy?
We had the chance to collaborate with crypto businesses in Italy helping them to grow a solid and compliant business model. Contact us to learn more.
