New documents suggest Italy’s top tax office is treating bitcoin as a form of currency.
Agenzia della Entrate, Italy’s top tax authority, released new information this month about its treatment of digital currencies, a publication that comes months after an EU court ruling regarding how value-added tax (VAT) would apply to transactions executed using the technology.
According to the Agenzia della Entrate, purchases and sales made with bitcoin remain exempt from VAT – a decision that mirrors a decision by the European Court of Justice (ECJ) last October. However, Italian tax officials, the documents show, are applying income tax to speculative uses of bitcoin, or events in which money is made during a sale or purchase.
The agency published the ruling in response to a request by a business in Italy, the name of which wasn’t disclosed. Those buying bitcoins outside of the scope of speculative activity, it indicates, aren’t required to pay income tax.
In doing so, the Agenzia Entrate appears to be treating bitcoin as a form of currency, a move that is the latest turn regarding bitcoin taxation worldwide.
While the ruling largely brings Italy in line with the decision set by the ECJ, it further highlights the disparity between Europe and countries like the US, which taxes bitcoin as a form of property.
At least one analyst reported there are issues with how the Agenzia della Entrate crafted its ruling, however.
Italy-based CPA and tax advisor Stefano Capaccioli, who has written about the issue on his blog, said that the ruling creates a new layer of uncertainty for businesses working with the digital currency.
Specifically, while the agency is looking to tax bitcoin as a form of currency, Italian law itself doesn’t recognize it as such. Further, he said that accounting standards in place today in Italy are also in conflict with the Agenzia Entrate’s position on bitcoin.
“It could generate more problems than solutions,” he told CoinDesk.
Italian tax form via Shutterstock