habemus Budget Law 2023and with it the first attempt to classify cryptocurrencies. In a previous article, we already explained our first impression of the amnesty for cryptocurrencies.

In short, it consists of the possibility of eliminating such assets from being included in past years’ tax returns. How can this be fixed? By paying a small substitution tax. But is it worth organizing one’s belongings? Is it right to take advantage of the amnesty for cryptocurrencies? Let’s try to clarify.

What does the amnesty law provide for cryptocurrencies?

The 140th paragraph of the 2023 Budget Law No. 197/2022, the taxpayers who have not made a declaration in their tax return, Crypto assets held until 31.12.2021 can apply for an exemption. About what?

In practice, relevant persons who did not earn any income during the reference period can adjust their status by showing the assets held at the end of each tax period. The necessary condition for the beneficiary to benefit from the amnesty for their own cryptocurrencies is to pay a fine of 0.5% per year of the value of the undeclared assets. This type of amnesty can be abused by: All taxpayers who do not declare their cryptocurrencies but do not earn income.

Those who earn income until 31/12/2021 can edit their positions through the same application. At what price though? In this case, the fine increases to 3.5% of the value of the assets held at the end of each year or at the time of realization.. To this penalty is added interest and a penalty of 0.5% for failing to complete the RW portion. The indispensable condition of benefiting from the amnesty is “demonstration of the legitimacy of the sums invested.In fact, filing for disclosure would need to show that the source of the funds invested was not the result of illegal activities.

CBetter to take advantage of the amnesty and declare their own cryptocurrencies? Adhere to. Of course, a 3.5% fine to make up for any past income could be described as tempting, but we believe it’s better to steer the discussion elsewhere. As mentioned earlier, especially in the past year (referring to revenue generated in 2021), a large number of taxpayers have declared cryptocurrencies.

Should I take advantage of the amnesty?

On what basis? on the basis of Opinions of the Revenue Administration. Yes, why These issues were not even regulated until Law No. 197/2022 came into force.. These were only “edited” by the collection agency’s responses to Interpello. These answers have no regulatory value, so no law has explicitly required taxpayers to include cryptocurrencies in their returns.

Having said that, it seems paradoxical to be able to take advantage of the amnesty for not declaring cryptocurrencies, while the obligation to make any declaration has not been expressly stipulated until now. At first sight seems odd to pay a fine for not following a law that doesn’t exist, at least in theory. We conclude our reasoning with a few observations. The first consists of emphasizing that the amnesty enables the issuance of crypto statements until 31/12/2021. Nothing is clearly foreseen for 2022, when it will be necessary to evaluate how to act.

The second observation concerns the analysis of paragraph 127 of Law no. 197/2022. Second, it ensures that capital gains/losses related to transactions involving crypto-assets made prior to the enactment of Law No. 197/2022 are considered realized. What does it mean?

It means Capital gains realized prior to the entry into force of the Budget Act are potentially taxable, just as capital losses are potentially deductible.. At first glance, this paragraph appears to be an inadequate (and retrospective) attempt to shift the taxable issue to taxation. As if confirming that no law has ever existed and that the taxable issue in question is not exactly that. If this were the case, many taxpayers who paid 26% replacement tax on capital gains in previous years would have more reason to apply for a refund of the taxes they have already paid.

Check out other articles by certified public accountant and statutory auditor Giammarco Brega. Budget Law 2023: