Affrancamento (Italy)
In Italian tax legislation, affrancamento (or rideterminazione del valore di acquisto) is a statutory cost step-up revaluation mechanism that permits taxpayers to revalue the tax cost basis of their crypto-assets to their fair market value as of January 1 of a designated fiscal year. Introduced by Italian budget legislation, this mechanism allows Italian tax residents to establish a higher fiscal starting point for accumulated historical paper gains by paying a dedicated substitute tax.
How the revaluation mechanism works
Under standard tax rules, selling a cryptocurrency that has experienced substantial historical appreciation yields a taxable capital gain based on the original historical acquisition cost. By electing for affrancamento:
- Valuation snapshot: The taxpayer determines the official fair market value of eligible crypto holdings as of January 1.
- Substitute tax payment: A statutory substitute tax is assessed on the aggregate declared January 1 valuation.
- New cost basis established: That January 1 value becomes the new fiscal cost basis for subsequent LIFO disposal calculations.
- Gain shielding: When the assets are later sold, capital gain taxation is assessed only on market appreciation realized above the stepped-up January 1 value.
| Dimension | Statutory Rule and Application |
|---|---|
| Valuation Reference Date | January 1 of the designated fiscal year |
| Tax Base | Total aggregate market value of the revalued tokens (not just the gain margin) |
| Subsequent Disposals | Future capital gains are calculated using the stepped-up valuation as baseline cost |
| Loss Recognition | The stepped-up basis cannot be used to generate deductible capital losses upon future sale |
Legal conditions and inventory impact
Once elected and perfected according to statutory rules, the stepped-up valuation replaces the historical cost lots in the taxpayer's LIFO inventory. Taxpayers must retain complete valuation documentation, exchange ledgers as of January 1, and proof of tax remittance to support their tax returns. For practical calculation and tax declaration rules under Italian tax residency, see our dedicated guides on Calculating Capital Gains and Cost Basis and the Italian Crypto Tax Return Guide.
The information in this article is for general literacy only. It is not tax, legal, financial, or accounting advice and does not replace Agenzia delle Entrate instructions or advice from a qualified professional for your circumstances. It must not be used to evade tax obligations. We make no warranty as to accuracy, completeness, or currency; rules and practice can change. Do not file returns or make decisions based solely on this text. RIXTO is not liable for loss arising from use of, or reliance on, this information.