(Finance) – Following the approval of the 2023 budget law, which regulated the tax aspects, cryptocurrencies are now included in the new category of “cryptoassets”. With the introduction of a new ad hoc tax, applicable to capital gains generated by transactions in cryptocurrencies, the interpretation of the Revenue Agency has been definitively superseded, which in its practice documents considered the taxes envisaged for foreign currencies to be applicable . At the same time, a “regularization” procedure has been envisaged for those who have made them in the past and have failed to declare them and pay the relative taxes. We asked Carlo Cicala, partner lawyer of the Cicala-Riccioni & Partners law firm and director of Criptolex.it to explain the essential lines of the regularization procedure.
What are the advantages, introduced by the 2023 budget law, for the investor who wants to regularize his position for the past?
“I begin to answer by talking about the advantages that do not exist, and that perhaps someone could have expected. Regularization does not exclude the punishability, either from a criminal point of view, of the conduct of use and laundering of the sums transferred to the cryptocurrency deposits, nor does it preclude disputes , from a tax point of view, regarding their origin: verbatim it is expected that ‘the demonstration of the legitimacy of the origin of the invested sums remains valid’ The mechanism for identifying the sums to be paid is apparently simple: if in the tax year capital gains, 3.5% of the total value of the assets must be paid, held at the end of each year or upon realization, in addition to 0.5% if the indication in the RW framework (monitoring obligation) has been omitted.
So the amount to be paid is not commensurate with the tax that would be assumed to be evaded?
“At least as far as capital gains are concerned, that’s exactly the case. A percentage (3.5%) of the entire portfolio is requested, without considering the amount of the capital gain. This was obviously done to simplify the methods of calculation, which it will therefore take place without the need to establish ‘when’ the investor has made a profit. Something that, in the past, was not clear even by carefully reading the Agency’s circulars”.
In a market as fluctuating as that of cryptocurrencies, when can you say you have made a capital gain?
“Let’s look at the regulations in force today. First of all, it must be stated that the formulation of the law is not clear, and the answers that can be given today are largely debatable. However, we can start from the rule, set out in the new regulations, according to which ‘it does not constitute a fiscally relevant case is the exchange between crypto-assets having the same characteristics and functions” (paragraph 126). The underlying intention is clearly that of avoiding subjecting the crypto-crypto exchange to taxation, i.e. between two equally volatile entities”.
So a crypto-euro exchange can give rise to a capital gain. But what about an exchange, for example, between Bitcoin and a stablecoin?
“The answer depends on the interpretation you want to give to the standard. The stablecoin, as is known, is certainly to be considered a cryptocurrency, but its value is, or at least should be, ‘anchored’ to that of a traditional currency. From from this point of view, therefore, buying a stablecoin pegged to the US dollar (USD) by paying in bitcoin could achieve a fiscally relevant fact.But we know very well that the peg between stablecoins and FIAT currencies is not guaranteed, or in any case is characterized by a degree of more or less high risk. The collapse of UST (a stablecoin anchored to the dollar, part of the Terra ecosystem, which lost almost all of its value in May 2022, ed.) is there to teach us this. It is true that some stablecoins offer more guarantees than others, for example because they are ‘collateralized’ by funds held by banks, but structurally it seems to me much more similar to a cryptocurrency like bitcoin than to a FIAT currency, with the consequence that the exchange with stablecoin should not give rise to tax phenomena. However, the matter is complex and could be the subject of new interventions by the Agency”.
In order to establish whether a capital gain has been made, it is necessary to assume a “carrying value” of the cryptocurrencies purchased. How is this value determined?
“The new regulations provide for a total reversal of the burden of proof, placed entirely on the taxpayer. On this point the law is very clear ‘the purchase cost or value is documented with certain and precise elements by the taxpayer; in the absence the cost is equal to zero”. It is therefore the taxpayer who must keep or obtain elements to demonstrate the purchase value. Obviously, the data of the purchase transaction, which shows the price paid, can be used, but it will be advisable to corroborate them with exchange rate surveys from the main exchanges, and this even though the latter constitute public data.Unfortunately in this case too, in the face of numerous statements of principle where it is assumed, always in the abstract, that the tax authorities bear the burden of demonstrating the own claims, such an affirmation is almost always emptied of concrete meaning, as in this case”.
To avoid these problems, a percentage amount has been set to be paid on stock, and not on capital gains. But how much should you join?
“Adherence to the regularization envisaged by the new discipline may not be convenient. To say so, obviously, I don’t even examine the hypothesis in which one wants to dispute, at root, the fact that a tax is due for the past. Let’s consider the setting of the Agency (crystallized in the various documents of practice), which assimilated cryptocurrencies to foreign currencies, applying the relative tax.Those who have omitted to monitor or indicate the capital gains can still make use of the ordinary concessions, provided for those who want to regularize any tax not paid before the Agency’s assessment arrives, and which could be particularly convenient especially for the 2021 tax year. This is because, while the ‘new’ regularization takes into consideration the entire amount of the portfolio, the ‘old’ ‘ and always valid tools provide for the payment of sums, also by way of penalties, in principle parameterised to the effective capital gain r accomplished. It is therefore necessary to have an adequate comparative statement illustrating the sums to be paid in both cases and to make sure that you have all the supporting documentation, to be shown to the tax authorities in case of checks”.
Ultimately, can the taxpayer today obtain all the elements necessary to identify the most convenient solution?
“In reality, to have the largest possible number of data available, it is necessary to wait for the provision of the Director of the Revenue Agency which indicates the operating procedures of the regularization”.