ITALY: No VAT for Cryptoartists.

Agenzia delle Entrate opened a consultation on the Tax Treatment of Cryptoassets.

In this document, NFT sales by crypto artists are also discussed.

VAT

In the case in which NFT is digital artwork (so-called “digital art”) and the sale is carried out by the same author, the operation has no relevance for VAT purposes as for Article 3, fourth paragraph, letter a) of the Italian VAT law, because the operation is not considered a provision of services.

Article 3, fourth paragraph of the Italian VAT decree (DPR 633/1972):

“The following operations are not considered services:

a) transfers, concessions, licenses and similar, relating to the copyright carried out by authors and their heirs or legatees, except those relating to works referred to in nos. 5) and 6) of art. 2 of Law 22 April 1941, no. 633, and works of all kinds used by business entities for commercial advertising purposes; (…)”

The operation is therefore excluded from VAT and not subject to the issuance of an invoice under Article 21 of DPR 633/72.

DIRECT TAXES

It should be noted that the transfer of NFTs by the author (outside the exercise of a commercial business) constitutes “self-employment income” under Article 53, paragraph 2, letter b) of the TUIR (DPR 917/86) or under Article 67, paragraph 1, letter l), of the same TUIR in the case where the activity is not habitually exercised.

Therefore, the income falls under the individual “royalties” regime with the benefit of a lump-sum deduction equal to:

- 40% of the compensation, for authors under 35 years old;

- 25% of the compensation, for authors aged 35 or older.

The situation of a crypto artist who transfers intellectual property in an immaterial form is therefore attracted by the VAT exclusion and the direct taxation is based on self-employment income.