The cashout method used in Italy is LIFO (last in, first out).
Read the following guide to learn how it works.
What is LIFO (Last In, First Out)?
LIFO is an accounting method used to determine which units of an asset are considered sold when a portion is disposed of—such as when selling cryptocurrency.
Under LIFO, the most recently acquired assets are considered the first ones sold, regardless of which actual tokens were transferred in the transaction.
Example:
5 March: User A purchases 0.5 ETH for €950 (ETH market price: €1,900)
10 May: User A purchases an additional 0.5 ETH for €900 (ETH market price: €1,800)
2 June: User A purchases 1 ETH for €1,600 (ETH market price: €1,600)
6 June: User A sells 1.5 ETH for a total of €2,400 (ETH market price: €1,600)
LIFO Calculation:
The first 1 ETH sold comes from the June purchase, the next 0.5 from the May purchase:
Gain/loss calculation as follow:
(1.5*1,600)-[(1*1,600)+(0.5*1,800)] = -100
Crypto-to-Crypto Transactions from 2023 Onward
The tax treatment of crypto-to-crypto transactions depends on the categories of the cryptocurrencies involved.
According to the October 2023 circular issued by the Italian Revenue Agency, each cryptocurrency must be classified based on two key criteria:
Economic Function
E-money Tokens: Cryptocurrencies designed to maintain a stable value relative to a fiat currency (e.g., Euro or USD).
Asset-Referenced Tokens (ARTs): Cryptocurrencies whose value is backed by a reserve of assets, such as other cryptocurrencies, fiat currencies, stocks, or bonds.
Other Crypto Assets: All remaining cryptocurrencies that do not fall under the above categories.
Economic Purpose
Utility Tokens: Provide access to a product or service within a specific crypto project.
Security Tokens: Represent digital forms of traditional financial instruments, such as stocks or bonds.
Payment Tokens: Serve as a medium of exchange for goods or services or as a means of transferring value.
Non-Fungible Tokens (NFTs): Unique, non-interchangeable digital assets, typically used in areas like art, gaming, or collectibles.
Crypto-to-Crypto cashout criterias (2023 onward)
See the tables below to understand the criterias used to determine whether a transaction triggers a taxable event or not.
Economic Function - Taxable Category
| Other Crypto Assets | ART | E-money |
Other Crypto Assets | Not taxed | Not taxed | Taxed |
ART | Not taxed | Not taxed | Taxed |
E-money | Taxed | Taxed | Not taxed |
According to the Economic Function, crypto-to-crypto swaps are taxed only when exchanging e-money tokens for Other Crypto Assets or ART (and vice versa).
Economic Purpose - Taxable Category Changes
| Utility | Security | Payment | NFT |
Utility | Not taxed | Taxed | Taxed | Taxed |
Security | Taxed | Not taxed | Taxed | Taxed |
Payment | Taxed | Taxed | Not taxed | Taxed |
NFT | Taxed | Taxed | Taxed | Not taxed |
According to Economic Purpose, crypto-to-crypto swaps are always taxed, except for transactions within the same category (e.g., payment token ↔ payment token).
A crypto-to-crypto trade is NOT taxed only if both criteria (Economic Function and Economic Purpose) indicate no taxation. You must check both tables to determine whether a swap is taxable.
Examples:
BTC ↔ ETH → Not Taxed
Token | Economic Function | Economic Purpose |
BTC | Other Crypto Assets | Payment |
ETH | Other Crypto Assets | Payment |
Reason: Same Economic Function and same Economic Purpose.
USDT ↔ SOL → Taxed
Token | Economic Function | Economic Purpose |
USDT | E-money | Payment |
SOL | Other Crypto Assets | Payment |
Reason: Different Economic Function.
LINK ↔ MATIC → Taxed
Token | Economic Function | Economic Purpose |
LINK | Other Crypto Assets | Utility |
MATIC | Other Crypto Assets | Payment |
Reason: Different Economic Purpose.
Crypto-to-Crypto Transactions Before 2023
Until 2023, crypto-to-crypto transactions were subject to taxation only if the taxpayer’s average cryptocurrency holdings exceeded €51,645.69 for at least seven consecutive business days within the year.
For tax years prior to 2023, it was necessary to consider the total value of cryptocurrencies held across all wallets and exchanges:
Above the threshold: crypto-to-crypto transactions were taxable.
Below the threshold: transactions were not subject to tax.
This calculation applies regardless of token categories and is relevant to all crypto-to-crypto trades.