There is no doubt that Italy is registering steady progress in the investment, adoption and use of cryptocurrencies like Bitcoin, Ethereum, etc., blockchain and distributed ledger technology, whether by the public, companies, financial institutions, businesses or others.
Recently, Ernst & Young, one of the largest accounting companies in the world operating in Italy, are actually investing in blockchain and crypto. The firm ratified that it had implemented two new products and further outlined the nature of these new applications.
According to Paul Brody, who is in charge of blockchain innovations at Ernst & Young, the first application is known as ‘blockchain analyzer’ for exclusive use of firm personnel, and is available for clients with control functions. With blockchain technology, it will be very easy and effective to automatically calculate taxes due for digital currency transactions in Italy.
Making Things Better with Blockchain
The application also makes it possible to calculate the capital profits and losses on every transaction based on U.S Tax Law, and further makes work for the operators very easy since it is automated.
Last month, the firm also rolled out an important tool known as EY Crypto-Asset & Tax (CAAT) created to carry out all accounting and tax-related preparations particularly on cryptocurrency trading. The tool can download data made on different transactions from all cryptocurrency exchanges and automatically generate reports such as the declaration of income.
The company has also created a second product, which is a zero knowledge proof protocol that enables users to carry out private and more secure transactions on public blockchains. In 2018, it successfully worked on the prototype – that will trim the costs of processing transactions by more than 90%, and now, it is final product is undergoing trials (experimentations) and it will be rolled out as open source software possibly in June this year.
This effort has excited several businesses in the field of blockchain, due to the fact that these are crucial tools that will trigger the inflow of new liquidity in the market. However, several potential
investors in Italy & across Europe, are afraid of making big investments in cryptoassets because they think that the processes involved in making investments as well as paying taxes could be tiresome and bureaucratic.
Fighting Tax Evasion Using Distributed Ledger
No doubt, with the use of these new applications designed by the globe’s giant audit and accounting firm, all these difficulties will be greatly reduced, and this will attract more and more cryptocurrency investors to enter the market.
European auditors and tax authorities have been facing various challenges that are related to: technological revolution, trust in businesses, and shifting geopolitical landscape.
If these tools will be available in Italy and in other European countries, those who deal in cryptocurrencies will now be in position to provide documents needed by tax and accounting authorities (such as ADE in Italy) – these document will play an important role during tax assessment and tax collection and other major activities related to taxation.
Since the Italian cryptocurrency regulatory framework is still shaky especially when it comes to tax obligations, as well as anti-money laundering (AML), plus other major financial transparency responsibilities, the
tax authorities are planning to do something big that is convincing. Italy remains positive with its plans of using blockchain technology to
combat tax evasion.