The figure quoted above is important in relation to how much money you hold in deposits in foreign currencies (cumulatively) at any one time.
There is a part of the Italian tax law (L’art.67, comma 1-ter del Tuir) relating to the application of capital gains taxes and capital losses, which would appear to be little understood by most.
The law states that where you hold over €51645,69, (1 million lira equivalent) cumulatively, in foreign currency accounts (non EUR) for a ‘period of over 7 days‘, then when you transfer any of that money into EUR (or another currency), the amount exchanged is automatically subject to the calculation of capital gains tax (or losses) in Italy, because the transaction of changing money from one currency to another itself, is assumed, after 7 days of the money being held in deposit, to be a speculative transaction as the result of a ‘trading operation’ instead of merely a conversion of currency for any other means.
How do I calculate my gains?
This is where it gets a bit complicated as you might imagine and is not quite as simple as the image above would make you believe.
Without wishing to go into too much detail in this E-zine, you take the amount of euros (or other currency) that you end up with in your account ‘after exchange’, but then need to refer to a EUR cost of those monies at the time at which you originally received that foreign currency. You convert that sum into EUR using the Banca D’Italia exchange rate on the specific date or dates when they landed in your account, depending on whether you received the funds in one go or if they were accumulated over time.
As you might imagine this could be hellishly complicated if you have been receiving monies in from various sources over a period of time. However, reference would have to be made to each deposit in non-EUR currency, and a EUR equivalent calculated on the day when it was deposited in the account. In the case where deposits are not documented, for whatever reason, then the Agenzia delle Entrate will refer to the worst monthly conversion rate to EUR for that said currency, in the tax period in which the liability arises (i.e. calendar year). This could work in your favour in some cases, and create additional tax liabilities in others, so care needs to be taken.
Finally, if you do not convert all the funds in your foreign currency account into EUR then the ‘last in first out’ principle applies. This means you must refer to the latest deposit/s in any of your foreign currency accounts, which equate to the sum which you have exchanged to EUR or other currency, and use the Euro conversion value on the date that those funds arrived in your account.