# Italy Aims to Be the First Nation to Exempt NFTs from VAT
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Chapter 1: Introduction to Italy's NFT VAT Exemption
Italy is making strides towards becoming the first country to exempt non-fungible tokens (NFTs) from value-added tax (VAT). This initiative could lead to substantial tax savings for artists and collectors alike.
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Section 1.1: Government Announcement
On June 15, 2023, the Italian government, through Agenzia delle Entrate, revealed its plans to exclude NFTs from VAT. This move aims to make NFTs more accessible for creators and buyers, as detailed in their consultation.
Subsection 1.1.1: Image of NFT Art
Section 1.2: Eligibility Criteria
The exemption pertains specifically to NFTs classified as works of art or digital collectibles. Conversely, NFTs viewed as financial instruments, like those that signify cryptocurrency ownership, will still incur VAT. Sales of digital artwork NFTs are not treated as service provisions, thereby exempting them from this tax. When an artist transfers an NFT outside the scope of commercial activity, it is classified as “self-employment income” and is subject to individual royalties.
Credits: Agenzia Delle Entrate
Chapter 2: Financial Implications of the Exemption
Under this proposal, authors aged 35 and younger can claim a 40% deduction on their earnings, while those older than 35 can deduct 25%.
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Section 2.1: Potential Savings for Artists and Collectors
This exemption has significant financial implications. For instance, if an NFT sells for €10,000, the typical VAT would amount to €2,000. However, with the proposed exemption, this tax burden would be eliminated, resulting in a €2,000 savings—an impactful amount for both artists and collectors.
Section 2.2: Future of NFT Taxation
While the tax exemption is a promising step, it has yet to be finalized. Should the legislation pass, Italy would pioneer the global exemption of NFTs from VAT. This policy shift is a positive signal for the cryptocurrency market within Italy, simplifying legal compliance for artists and collectors.
It remains uncertain whether other nations will follow suit in exempting NFTs from VAT, but Italy's initiative could inspire similar changes worldwide. The consultation period for feedback extends until June 30, 2023.