Taxation of income from cryptocurrency staking activity

The Italian Revenue Agency, with its answer to ruling No. 437 of 26 August 2022, has clarified that cryptocurrency stacking activities are to be considered as capital income, to be reported within the RL panel of the “Modello Redditi”.

1. The position taken by the Agency with its reply No. 433 of 24 August 2022

In its previous answer 433 of 24 August 2022, the Italian Revenue Agency stated that if a remuneration in cryptocurrency received by individuals outside the business activity, for the staking activity, had been credited to the wallet by an Italian company, the latter would have had to apply a withholding tax at the rate of 26 per cent pursuant to Article 26, paragraph 5, of Presidential Decree No. 600 of 29 September 1973.

As a consequence, the wallet holder would not have had to declare anything in its income tax return having suffered a withholding tax.

Inside answer 433 remained valid that the remuneration in cryptocurrencies of the staking activity is classifiable as capital income within the meaning of Article 44 c. 1 letter h of the Tuir.

Moreover, as clarified in Circular No. 165/E of 24 June 1998, the existence of any relationship through which an investment of capital is made is sufficient for the existence of capital income, including relationships not based on correspondence, ie where there is no correspondence between the use of the capital and the income earned.

2. The Change of direction with reply 437 of 26 August 2022

In its subsequent answer to ruling No. 437/2022 dated Aug. 26, the Italia Revenue Agency once again deals with the matter of remuneration for cryptocurrency staking activities carried out – outside the business activity – by an individual resident in Italy and paid by a resident company.

After recalling the clarifications contained in Circular No. 165/E of 24 June 1998, the Agency states that cryptocurrency remunerations received by individuals outside the business activity for staking activities, are subject to taxation pursuant to the aforementioned letter h) of paragraph 1 of Article 44 of Tuir and, therefore, if credited to the wallet by an Italian company, the latter is required to apply withholding tax at the rate of 26 percent pursuant to Article 26, paragraph 5, of Presidential Decree No. 600/1973.

However, in contrast to what was previously stated, in this recent reply the Agency points out that since the petitioner is a natural person resident in Italy, such remuneration will have to be subject to withholding tax by the Company and indicated by the taxpayer in Section IA ”Capital Income” of Schedule RL of the “Modello Redditi”

Regarding tax monitoring obligations, reply No. 437/2022 reiterates that, taking into account that the taxpayer holds the wallet with an Italian company, he is not subject to tax monitoring obligations, nor the paymento of IVAFE.

Regulatory Framework: Local Regulation:

Legal practice:

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