The cryptocurrency amnesty has an expiration date: November 30, 2023. To be honest, it’s more of an “emergency appeal” than an amnesty. As a matter of fact, paragraph 138 of the latest Budget Law allows those who do not declare the income of crypto assets held as of December 31, 2021, to make such an application. Until now, presentation times and methods were unknown. Now, thanks to a recent ruling from the Internal Revenue Service, we have all the necessary tools to uncover undeclared cryptocurrencies by 2021.
We’ve already covered this issue in the past:
But first of all, we made a series of evaluations. We remember that these issues were not regulated until the entry into force of the recent Budget Law. Taxpayers who declared their assets until 31/12/2021 did this exclusively on the basis of inquiries from the Revenue Administration. (to date) there was no law requiring this fulfillment. Now legislation intervenes by providing the possibility of rectifying potential unfulfilled past obligations. As a result, it seems odd to have to take advantage of an amnesty for not declaring cryptocurrencies, while a disclosure obligation has not been explicitly stipulated so far. In other words paying a fine for not complying with a law that does not exist.
Still. Article 127 of the Budget Law regulates that capital gains/losses related to transactions involving crypto assets made before the Law came into force shall be deemed to have been realized. What does it mean? This means Capital gains realized prior to the entry into force of the Budget Law are potentially taxable, Besides the potentially deductible capital losses. As if confirming that no law has ever existed and that the taxable issue in question is not exactly that.
However, let’s go back to the instructions recently shown by the Internal Revenue Service to offer amnesty for cryptocurrencies. Interested taxpayers who are unable to specify cryptocurrencies in the RW framework of their returns until 2021 can adjust their positions. Like?
- presenting the model;
- showing the value of cryptocurrencies held in each tax period;
- by paying a fine of 0.5% of their retained value at the end of each tax period.
Those who do not declare their income from crypto assets can follow the instructions outlined above. With one small difference though: they will have to pay.Substitution tax of 3.5% of the value of cryptocurrencies.
The so-called application for the emergence or pardon of cryptocurrencies will have to be submitted Until 30 November 2023and related substitute taxes and/or penalties must be paid by that date. However, we learn from the aforementioned provision that there is an additional burden for the taxpayer, which consists in attaching a report attached to the application. This report should have the following content:
- a general picture of all violations that are the subject of the claim;
- statement of reconciliation between the documents submitted and the amounts reported;
- Analytical detail of the overall value of cryptocurrencies and other crypto assets. At each realization or on December 31, it will be necessary to prepare a special statement to indicate the value of crypto-assets separately by type.
What rate does this last realization represent? We remember that the taxpayer must. to show “the legality of origin of investment amounts” (paragraph 142) and also document the purchase cost of the person’s assets “in certain and precise elements” (paragraph 126).. In their absence, the cost is zero. How can the taxpayer bear this burden? By generating the following documents as an example:
- bank accountants;
- wallet address;
- transaction ID numbers;
- any document issued by intermediaries from which the attribution of crypto-assets to the applicant can be definitively deduced.
At this point the question arises itself. The Web3 world is characterized by DApps, DAOs, and other ecosystems of cryptocurrencies – double and non-five tokens – that execute transactions on-chain (hence without any intermediaries). How is it possible to find suitable documents in these situations?
In any event, the application for regulation must be submitted in full with all necessary attachments. Sent via PEC and digitally signed. The provision clearly foresees the possibility that the person preparing the transmission may be a professional.
In conclusion, we state the following through final considerations:
- Amnesty for cryptocurrencies provides: Payment of 0.5% fine for non-completion of the RW framework. At first glance, this seems particularly appropriate given that penalties for non-compliance can, in some cases, amount to 30% of undeclared amounts;
- Amnesty for cryptocurrencies provides: If the income received is not declared, a replacement tax of 3.5% is paid.. This seems particularly appropriate given that the ratio applied to capital gains is 26%. Not to mention the possible penalties for non-declaration, which in some cases amount to 240% of the tax due.
However, the prevailing thought does not change. The cryptocurrencies amnesty appears to be an attempt to lure taxable subjects into taxation in a retrospective and often illegitimate way.