The regularization procedure (also known as voluntary disclosure in Italy) provided for in the Italian Budget Law 2023, is finalized sending the relevant application to the Tax Revenue Agency, together with the accompanying report, and paying the amounts due, by the set deadline of November 30, 2023.
How to regularize cryptocurrency – Requirements for voluntary disclosure in Italy
Who can apply for the voluntary disclosure in Italy?
The following can apply for the procedure:
- Individual taxpayer;
- Non commercial entities;
- Limited Companies and other companies as per Art 5; Presidential Decree N.917/1986;
provided they are resident in Italy.
What can be regularized?
The following obligations can be regularized:
- Breach of tax monitoring obligations as per Art.4, Paragraph 1, Law Decree N.167/1990 (i.e. RW panel of Income Tax Return not filled in and forwarded to the Tax Revenue Agency);
- Breach of reporting obligation for income tax and additional taxation purposes, (i.e., Panel RT of Income tax Return not filled in and capital gain tax due not paid);
This applies to crypto assets held by December 31st, 2021.
The voluntary disclosure and relevant procedure applies to tax years up to 2021, provided that, by the date of submission of the request, the deadline for the verification or the dispute of the reporting obligation as per Art 4, Law Decree 167/1990 and the income tax/ additional tax payment have not expired.
What cannot be regularized?
The regularization procedure expressly excludes all investments purchased with funds coming from unlawful sources.
In order to prove the lawful origin of the funds and, therefore, the lack of criminal liability, the taxpayer must also submit to the Tax Revenue Agency a report, inclusive of evidentiary documents.
Moreover, the taxpayer will positively cooperate with the Tax Agency and provide all data and information needed to assess the value of the crypto assets and/or the income accrued at the end of each tax year and/or at the end of the holding period – in order to apply the relevant taxes and fines.
Fines foreseen in respect of the regularization procedure
Once the requirements needed have been checked, the taxpayer applying for the regularization procedure will pay the following:
- A reduced fine of 0.5% of the value of the crypto assets when not included, for monitoring purposes, in the relevant Tax Revenue, RW panel, or in case of missing filling of the same RW panel, when compulsory; the fine is applied for each tax year in which the assets were held by the taxpayer and the crypto assets value is the one at year end or at the date of transer
- A 3.5% tax on the value of crypto-assets held , including crypto currencies, at the end of each tax year and/or at the end of period of ownership of the same assets; this applies when the income/capital gain from crypto assets has not been included, in full or in part, in the Tax Return of the relevant year/s.
Fines applied when not joining the regularization procedure
- Regular fines applied when the taxpayer does not fill in the compulsory RW panel of the yearly Tax return are 3% to 15% of the non-reported income. The fine doubles to 6% to 30% of the aforementioned income if the assets are held in a country with privileged tax regime;
- In case of assessment of a higher tax due- in addition to the above breach of the compulsory filling of Panel RW in the Tax Return- the omission related fine is equal to 90% to 180% of the tax due, as per Art1, Law Decree N.471/1997. In case the assets are held in a country applying a privileged tax regime, the fine doubles to 180% to 360%.