Italy’s Crypto Tax Hike to 33% in 2026: Implications for UHNW Portfolios

Date: 21 Jan 2026

Karen Jones

Italy update 2026: Italy’s decision to increase the tax rate on cryptocurrency gains to 33 percent from 2026 marks a significant signal in how the Italian authorities are considering crypto.

For high-net-worth families, the change comes at a time when crypto holdings are already intersecting with succession planning, disclosure obligations and cross-border reporting. As Italy tightens both taxation and transparency, advisers warn that digital assets can no longer be managed as a parallel or informal part of a family balance sheet, but must be integrated into mainstream wealth, tax and governance planning.

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Marco Sandoli, Partner, at LED Taxand a tax law firm based in Milan adds a warning view point on the theme of crypto. “In Italy, higher taxation so 33%, on crypto, can create an incentive to under-declare, especially where self-custody and cold wallets are involved. That said, the European rules and their Italian implementation are moving toward more transparency (regulatory perimeter, reporting and data exchange), so the practical advice is to focus on compliance and traceability upfront, inventorying holdings, documenting flows, and aligning custody structures with tax reporting, because the combined risk of tax + sanctions + litigation exposure, can be far more expensive than proper disclosure.”

Crypto Disclosure, Voluntary Regularisation and Succession Risk

Giuseppe Violetta, Partner at Violetta & Partners in Milan, adds a wider view, saying. “The Italian framework, while imposing significant reporting obligations, offers a viable path forward for cryptocurrency holders. The 33% tax rate applies only to realized gains, not to simply holding cryptocurrency, and voluntary disclosure mechanisms provide a way to regularize past non-compliance with manageable consequences.”

“More importantly, the risks of non-disclosure extend far beyond potential tax penalties. The Culligan divorce case demonstrates the legal jeopardy in family law contexts, but the everyday risks of asset loss and succession planning failures may ultimately prove more costly.”

“Cryptocurrency represents a new asset class that requires new thinking about disclosure, management, and succession planning. The technology’s privacy features are a characteristic, not a strategy. In the Italian context, working collaboratively with tax authorities and professional advisors to ensure full compliance is not just legally required; it’s the only way to ensure that cryptocurrency wealth can be properly protected, managed, and eventually transferred to the next generation.”

“The message is clear: transparency is not the enemy of cryptocurrency investors. In fact, proper disclosure and professional management are the only ways to truly secure the long-term value of these digital assets.”

“The recent Culligan divorce case, involving a substantial Bitcoin wealth, highlights a broader issue that transcends divorce proceedings: the tension between privacy features inherent in cryptocurrency technology and legal disclosure obligations.”

“In Italy, where cryptocurrency gains are subject to a 33% substitutive tax rate (26% for qualified holdings), one might reasonably ask whether such a high tax burden incentivizes non-disclosure, particularly for assets held in cold wallets that exist outside traditional financial intermediaries.”

“Under Italian law, the position is unequivocal: all cryptocurrency holdings must be declared, regardless of where they are held. Holding crypto assets in a cold wallet which is a hardware device or paper wallet stored privately, is legally equivalent to holding assets abroad. This is a critical point that many investors misunderstand.”

“Here’s where the Italian system offers a surprisingly pragmatic approach. Despite the mandatory disclosure requirement, the Italian tax authorities (Agenzia delle Entrate – equivalent to the HMRC and IRS) have shown themselves to be collaborative and solution-oriented when taxpayers come forward voluntarily.”

“The key mechanism is voluntary disclosure. If a taxpayer has failed to declare cryptocurrency holdings in previous years but comes forward proactively, before any investigation or audit begins—they can regularize their position with significantly reduced penalties and, crucially, with limited tax impact if no actual realized gains have occurred.”

“This is an essential point: if the wallet has not generated actually realized income, meaning you have simply held the cryptocurrency without selling or trading, the tax impact of voluntary disclosure can be managed. The Italian authorities understand that the cryptocurrency landscape is complex and evolving.Their collaborative approach encourages compliance rather than driving assets further underground.”

“Beyond the legal and tax implications, there’s a more fundamental risk that investors often overlook: holding undisclosed cryptocurrency in cold wallets creates significant practical and succession planning problems. If you lose access to your private keys, your cryptocurrency is permanently inaccessible. The blockchain is immutable and unforgiving. I have seen cases where substantial cryptocurrency wealth has been effectively destroyed because the holder failed to maintain proper backup systems or because a hardware wallet was discarded, damaged, or simply misplaced during a house move.”

Crypto upon death – succession planning nightmare

“Perhaps even more concerning is what happens upon death. Digital assets held in secret cold wallets represent a succession planning nightmare. How will your heirs know these assets exist? How will they access them? Italian succession law requires a complete inventory of assets for inheritance purposes.”

Violetta makes his final point,“The solution is proper integration of cryptocurrency holdings into comprehensive wealth and succession planning. This means full disclosure to tax authorities, professional custody solutions, multi-signature wallets that require multiple parties to approve transactions.”

Policy Signal: Higher Crypto Taxes and Government Favouring Third Party Products

Davide Cotroneo, Tax Supervisor at BDO Italy and an Italian tax expert shares his thoughts, “The move to a 33 per cent tax rate on crypto gains from 1 January 2026 is, by any measure, one of the more assertive headline positions internationally. For private wealth, however, the number is less important than what it represents. This is not simply a fiscal tweak. It is a policy signal about the legislature’s confidence in the crypto ecosystem, and about the direction Italy wants the market to take.”

“The signal is sharpened by comparison with what remains unchanged. Traditional financial investments continue to sit within the ordinary 26 per cent capital gains regime. The legislature has not “lifted the tide” across capital markets. It has carved out direct crypto exposure for higher taxation. That divergence is difficult to read as tax neutrality. It suggests a mindset still anchored to conventional finance, treating disintermediated crypto ownership as something to discourage, or at least to surcharge.”

“That policy preference becomes explicit once you look at the asymmetry between direct and intermediated crypto exposure. A direct purchase and disposal of a crypto asset can attract the 33 per cent rate from 2026. By contrast, crypto exposure obtained through traditional financial products, such as exchange-traded commodities with crypto underlying, can continue to fall within the ordinary 26 per cent capital gains regime.”

“The economic exposure may be similar; the tax outcome is not. This is a material distortion, and it is hard to avoid the conclusion that the framework is structurally more favourable to financial intermediaries and the products they distribute. For HNW and UHNW families, this is not an academic debate about crypto. It is an operating question for portfolio architecture. The access route and the legal classification now affect tax friction. That, in turn, affects liquidity planning, structuring decisions, and the defensibility of the family balance sheet when it is assessed by banks, auditors, counterparties or, in contentious circumstances, by a court.”

Transparency Shift with CARF: Custody Models and Reporting Risks

Cotroneo continues, “The tax tightening also lands alongside a transparency shift. From 1 January 2026, the market moves into a new reporting trajectory aligned to the Crypto-Asset Reporting Framework (CARF). It is not accurate to suggest that crypto activity was previously invisible to tax authorities. But it is accurate to say that visibility was more fragmented, and far less standardised across borders. The strategic purpose of CARF is to change that, over time, reportable crypto activity is increasingly capable of being routed to the tax authority of the jurisdiction of residence, irrespective of where transactions are executed. This is where custody becomes decisive. In a custodial model, assets are held and transactions executed by a service provider on the client’s instructions.”

“In practice, these are the arrangements commonly referred to as ‘hot wallets’. In a non-custodial model, by contrast, the individual controls the private keys directly, with no provider holding the asset. These are the ‘cold wallet’ arrangements.”

“Because reporting frameworks are designed around intermediaries, self-hosted wallets do not naturally produce the same third-party record trail. That said, cold wallets are not a complete carve-out. Where a cold wallet interacts with a custodial wallet or platform, the intermediary can see that a transaction is moving to or from a non-custodial address. That junction point is where risk can potentially arise.”

“Activity that has been managed privately can suddenly fall within the visibility of a supervised entity, increasing the likelihood of questions, risk-based controls and, over time, reporting consequences. The same dynamic applies to decentralised finance. The crypto market is effectively split between a centralised segment, where legal entities provide exchange and custody services, and a decentralised segment, where activity is carried out through protocols and smart contracts without an obvious intermediary. The centralised segment is moving rapidly towards a comprehensive reporting perimeter. The decentralised segment remains harder to capture in the short term, but it should not be regarded as permanently outside regulatory focus.”

“The two segments are on different regulatory timelines, and for private wealth that gap represents uncertainty and future change, not a stable or reliable safe space.”

Compliance Imperative: Reporting Obligations and Long-Term Visibility

“From an Italian compliance perspective, the starting point remains the personal tax reporting framework, including the monitoring obligations in the income tax return, such as the RW section. Failure to report crypto holdings continues to carry meaningful sanctions, regardless of whether assets are held through intermediaries or in self-hosted form.”

“The Italian tax authority already relies on a structured information ecosystem, combining data from VASP (virtual Asset Service Providers) reporting registers, the OAM (the official Italian authority responsible for managing the registry of crypto and digital wallet service providers) and domestic tax filings such as the Model 770 (mandatory annual tax return).”

“These sources allow automated cross-checks of individual crypto positions for recent years, making inconsistencies between operator data and personal tax returns an increasingly obvious trigger for scrutiny. The practical policy message is that cold wallets and decentralised channels are not outside the system in any reliable sense once one accounts for reporting obligations, interconnection and the administration’s growing data capability.”

In Italy, taxpayers can request a ruling from the tax authority to obtain a binding interpretation of unclear tax rules before applying them to a real situation.

Cotroneo explains further, “Italy is more advanced on the territorial treatment of crypto income than many internationally mobile clients assume. This is illustrated by Ruling no. 397/2022 of the Italian tax Authority, which examined crypto gains in the context of the Italian new-resident regime under Article 24-bis of the Italian income Tax code ‘TUIR’. The case involved an individual relocating from the UK to Italy, holding crypto partly on a foreign exchange platform and partly in a cold storage wallet located abroad, and realising gains after becoming Italian tax resident.”

“The tax authority approached the issue by applying the ordinary sourcing criteria relevant to the regime and, on the facts presented, treated the gains as foreign-source income potentially eligible for the substitute tax regime, subject to its conditions. The ruling is policy-relevant because it shows that Italy is prepared to locate crypto income by reference to factual and legal elements, rather than treating crypto as inherently offshore or unallocated.”

“For private wealth and divorce litigation, the lesson is straightforward. Crypto disclosure is no longer a technology issue. It is a coherence issue. As headline taxation increases and transparency mechanisms evolve, undisclosed positions are more likely to unravel because the overall financial narrative no longer aligns, rather than because a specific wallet is identified.”

Seen in this light, it would be a mistake to draw simplistic conclusions from today’s custody landscape. While cold wallets may currently appear to offer a degree of insulation from immediate reporting mechanisms, that perception should not be mistaken for a permanent safe harbour.

Cotroneo makes his final point, “Seen in this light, it would be a mistake to draw simplistic conclusions from today’s custody landscape. While cold wallets may currently appear to offer a degree of insulation from immediate reporting mechanisms, that perception should not be mistaken for a permanent safe harbour.”

Criminal exposure and administrative sanctions

Stefano Loconte, Founding Partner at Loconte & Partners, who is both a qualified lawyer and accountant confirms this view. “Self-custody affects the form of holding, not the obligation to report or the exposure to penalties. Italian law imposes mandatory reporting obligations and provides for administrative sanctions in the event of non-compliance.”

Raul-Angelo Papotti, Partner in Chiomenti’s Milan and London office, underlines this point. “As has been said, enforcement tools and information-exchange mechanisms are evolving rapidly. Non-disclosure therefore carries growing reputational, civil and, in certain circumstances, criminal exposure, particularly in divorce and succession disputes, where courts are showing limited tolerance for incomplete disclosure.”

Conclusion

Italy’s decision to increase the tax rate on cryptocurrency gains to 33 percent from 2026 is best understood as a policy signal rather than a standalone tax measure. It reflects a clear preference for transparency, traceability and intermediated structures, and places direct crypto holdings more firmly within the mainstream tax and compliance framework.

For high-net-worth families, the central issue is not the headline rate, but coherence. As reporting regimes expand and data flows become more interconnected through mechanisms such as CARF, the practical risks of non-disclosure increase. Cold wallets and self-custody may still sit on a different regulatory timeline, but they do not offer a stable or reliable refuge from scrutiny, particularly when assets interact with supervised platforms or form part of wider family, banking or succession arrangements.

The message from advisers and tax authorities is consistent. Cryptocurrency now needs to be treated like any other significant asset class within private wealth planning. Disclosure, documentation, custody choices and succession planning must align. In Italy, as elsewhere, opacity is becoming harder to sustain, while transparent and well-structured positions are increasingly defensible over time.

For internationally mobile families, crypto is no longer a peripheral issue. It is part of the same governance challenge that shapes trusts, succession and cross border planning, and it demands the same level of foresight and professional coordination.

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