Binance automatically withholds taxes in Italy

[DavideBaldini]

I am a Binance user in Italy, I received this email from Binance; it informs that by now taxes are automatically withheld on balances held on the exchange.

https://imgur.com/YmtW0Fj.png

Translation follows.


Dear Binance User,

Please read carefully the content of this communication ⤵️

Following the changes introduced by law 197/2022, the year-end balances of crypto assets are subject to taxation, whether they are held through non-custodial wallets (e.g. Ledger, Metamask, Trustwallet) or through exchanges like Binance. This is in line with what currently happens for traditional financial instruments.

Every Crypto Asset Service Provider active on the Italian territory has the obligation to pay the stamp duty: for this reason, you will find a limitation in the [Withdrawals section] equal to the amount of stamp duty to be paid (the rest is fully available for withdrawal).

✅ Binance Italy S.r.l., Crypto Asset Service Provider (CASP) registered with the OAM, is responsible for fulfilling its regulatory obligations with the highest standards.

As this is a new circumstance for us as well, we had to dedicate the necessary time to verify all the technical, fiscal and legal aspects.

🎁 This time was useful for us to decide how to give you a voucher on the trading fees to be used for future transactions on the Binance platform. This means that you will receive a voucher of the same value as the stamp duty paid, up to a maximum of 1,000 USDT.

Practical example:

Stamp duty paid: 10€

Voucher on the fees: 10 USDT approx.

For example, with trading fees of 0.1% on Binance, it is possible to trade crypto without paying fees up to 10,000 USDT of volume generated.

How do I pay the stamp duty?

On 31.12.2023 23:59 UTC, Binance, as required by law, calculated the stamp duty due for your account; in the [Withdrawals section], by clicking on deduct now, you will see a pop-up with the amount of stamp duty to be paid. If you have already paid the stamp duty in the previous days, we advise you to check again for any remaining amounts to be paid.

Your withdrawals are limited as you can only withdraw the amount exceeding the stamp duty to be paid.

To remove this limitation, you can press the "deduct" button in the [Withdrawals section] and pay the stamp duty in EURO immediately. If you do not have a sufficient balance in EURO, you can use the Convert section to convert your crypto into Euro (instant and zero fees), recharge your account in Euro through the services available here or deposit crypto from external wallets/exchanges for conversion.

In case you have not clicked and paid the tax by 19.02.2024 16:00 UTC, in the following days an automatic debit will be executed on your fiat and/or crypto balance present in your Binance account equal to the amount of stamp duty due.

In case the balance of your account is lower than the stamp duty due, you can convert your crypto into euro or recharge euro in your account and proceed as described in point 3 and 4.

As for the discount voucher on the trading fees, you will receive precise instructions by February 15, 2024.

In the following weeks, you will receive a statement attesting the balance of your account at 31.12.2023 and the relative stamp duty paid.

To sum up, what do I have to do?

Option A (recommended): Until 19.02.2024 16:00 UTC it is possible to proactively pay the stamp duty by pressing the "deduct now" button in the [Withdrawals section] and pay Binance the amount due in Euro as explained in point 3.

Option B: Wait for the automatic debit as described in point 4.

If the balance of your account is lower than the stamp duty:

Before the automatic debit, you can convert your crypto into Euro or recharge Euro as described in the Convert section or recharge your account in Euro through the services available here.

We thank you for your cooperation and we remain at your disposal for any clarification.

Binance Italy S.r.l.

[Z-tight]

Crypto is already taxed in the U.S. and in many other countries in the world, it is not new and you have to pay your tax if you live in such jurisdictions. From the article the asset providers are to pay the stamp duty as directed by the Italian government, and Binance have just informed their customers on how they are going to pay for the stamp duty.

The article states that assets in self custodial wallets are also going to be taxed, now will they be taxed when the owners move and sell them in custodial exchanges, or do the owners have any obligation to declare their assets and pay tax even when the funds are in their self custodial wallet?

[Darker45]

The article states that assets in self custodial wallets are also going to be taxed, now will they be taxed when the owners move and sell them in custodial exchanges, or do the owners have any obligation to declare their assets and pay tax even when the funds are in their self custodial wallet?

I suppose the owner has an obligation to declare his/her crypto assets and pay tax dues accordingly, if the assets aren't kept in centralized exchanges like Binance that have the capacity to automatically deduct taxes.

I have long stopped using Binance-- well, Binance was operating without paying taxes here in my country anyway-- but what if the account is active but the owner drains his/her Binance wallet every year-end? Since it has zero year-end balance, Binance won't be deducting any for stamp tax?

[Apocollapse]

I don't think either A or B has a big difference, you might get a penalty or additional charge if you choose the B option.

The article states that assets in self custodial wallets are also going to be taxed, now will they be taxed when the owners move and sell them in custodial exchanges, or do the owners have any obligation to declare their assets and pay tax even when the funds are in their self custodial wallet?

I read that you can choose whether you pay 26% capital gains or 14% of your total holdings, so @OP can choose the lower ones. However as long as you didn't make more than 2,000 Euros, you're fine.

They issued a small amount of guidance in Resolution no. 72/E/2016 stating that gains from trading cryptocurrencies were not considered taxable income. This is due to the lack of speculative nature involved in the transaction. But, if your total balance exceeds €51,645.69 for any more than seven consecutive days during the entire financial year, your profits are then viewed as capital gains and taxed at 26%.

However, in December 2022, the Italian Senate approved new tax rules for crypto gains as part of the budget legislation for 2023. Now, you'll pay 26% on any crypto gains whenever you have gains amounting to more than €2,000.

Interestingly, part of this bill includes an option for a "substitute value tax", where taxpayers may declare the value of their digital asset holdings as of January 1st each year and pay a 14% tax instead. This alternative hopes to incentivize Italians to declare crypto in their tax returns by offering a substantially lower tax rate.

but what if the account is active but the owner drains his/her Binance wallet every year-end? Since it has zero year-end balance, Binance won't be deducting any for stamp tax?

It means you're committing tax evasion, sooner or later you will receive a letter from your government about suspected trying to hide paying taxes.