International Crypto Tax Forms: IRS 8938, Canada T1135, and Italy RW/RT

Capital gains are only part of the crypto tax picture. If you hold crypto on foreign exchanges or through foreign platforms, you may have additional reporting obligations that carry serious penalties if missed. This guide covers three of the most important international crypto tax forms and how to generate them in Blockchain Smart Tax.

IRS Form 8938: Statement of Specified Foreign Financial Assets

Form 8938 is part of FATCA (Foreign Account Tax Compliance Act) and applies to US taxpayers who hold foreign financial assets above certain thresholds. Cryptocurrency held on foreign exchanges (Binance, Kraken for non-US entities, Bybit, OKX, etc.) qualifies as a specified foreign financial asset.

Who Needs to File

• Single filers living in the US: total value of foreign assets exceeds $50,000 on the last day of the tax year, or $75,000 at any point during the year
• Married filing jointly in the US: $100,000 on the last day, or $150,000 at any point
• US taxpayers living abroad (single): $200,000 on the last day, or $300,000 at any point
• US taxpayers living abroad (married joint): $400,000 on the last day, or $600,000 at any point

Important: Form 8938 is filed with your tax return (attached to your 1040). It is separate from FBAR (FinCEN 114), which has different thresholds ($10,000 aggregate) and is filed separately with FinCEN. You may need to file both.

Penalties for Not Filing

A $10,000 penalty for failure to file, with an additional $10,000 for each 30-day period of non-filing after IRS notice, up to $60,000. Plus potential criminal penalties for willful non-compliance. These are not theoretical — the IRS actively enforces FATCA reporting.

How to Generate It

In Blockchain Smart Tax, go to Tax Reports → International Forms → Form 8938. We automatically identify which of your wallets are on foreign exchanges, calculate the maximum value during the year and the year-end value, and generate the form with all required fields populated. Review it, download, and attach to your 1040.

Canada T1135: Foreign Income Verification Statement

Canadian residents who own "specified foreign property" with a total cost exceeding $100,000 CAD at any time during the year must file Form T1135. Crypto held on foreign exchanges counts as specified foreign property.

Who Needs to File

• Canadian tax residents (individuals, corporations, trusts, partnerships)
• Total cost amount of all specified foreign property exceeded $100,000 CAD at any point during the tax year
• This is based on cost, not market value — if you bought $100K CAD worth of crypto on Binance, you need to file even if the current value dropped to $20K

What Counts as Foreign Property

Crypto on any exchange incorporated outside Canada qualifies. This includes Binance, Coinbase (US entity), Kraken, Bybit, and most major exchanges. Crypto in self-custody wallets is more nuanced — the CRA has not issued definitive guidance, but conservative filers include it.

Two Reporting Categories

• Under $250,000 CAD: Simplified reporting (Category 7 checkbox, total amounts only)
• $250,000 CAD and above: Detailed reporting with country, description, income, and gain/loss for each property

Penalties

$25 per day for late filing, up to $2,500 per year. Gross negligence penalties of up to $12,000 per year. If you fail to file for more than 24 months, the penalty can reach 5% of the property cost.

How to Generate It

Go to Tax Reports → International Forms → T1135. We calculate your total specified foreign property cost in CAD, determine whether you qualify for simplified or detailed reporting, and generate the form. For detailed reporting, we break down holdings by exchange with country codes.

Italy: Quadro RW and Quadro RT

Italian tax residents have two distinct crypto reporting obligations that are separate from capital gains reporting.

Quadro RW: Foreign Asset Monitoring

Quadro RW is Italy's foreign asset monitoring declaration. All crypto holdings must be reported here, regardless of value. It is part of the annual Dichiarazione dei Redditi (tax return). For each asset, you report:

• The type of asset (code 14 for crypto)
• Country (the exchange's jurisdiction, or "999" for decentralized/self-custody)
• Beginning-of-year value and end-of-year value
• Maximum value during the year

IVAFE: The Italian Wealth Tax on Crypto

Based on your Quadro RW declaration, Italy applies IVAFE at 0.2% (2 per mille) on the year-end value of your crypto holdings. This is a wealth tax — you pay it on what you hold, not on what you sell. For example, if you hold €50,000 in crypto on December 31, you owe €100 in IVAFE.

Quadro RT: Capital Gains Reporting

When you dispose of crypto (sell, swap, spend), capital gains are taxed at a flat 26% rate. The cost basis method in Italy is typically weighted average cost or LIFO. Quadro RT reports your total proceeds, total cost basis, and the resulting gain or loss.

Common Mistakes Italian Filers Make

• Forgetting Quadro RW entirely — many filers report capital gains on RT but skip the RW monitoring declaration
• Not reporting DeFi positions — LP tokens, staked assets, and lending positions are all reportable on RW
• Wrong country codes — each exchange needs its correct country of incorporation
• Missing IVAFE calculation — the 0.2% wealth tax applies even if you had no disposals during the year

How to Generate It

Go to Tax Reports → International Forms → Italy. We generate both Quadro RW (with correct asset codes, country codes, and period-start/end values) and Quadro RT (with capital gains calculated using the weighted average method). IVAFE is calculated automatically and shown as a summary line.

Common Mistakes Across All Three Forms

• Ignoring the threshold until tax time — check during the year whether you are approaching the filing thresholds
• Forgetting transferred assets — crypto you moved from a foreign exchange to self-custody was still held on a foreign exchange at some point during the year
• Not filing both FBAR and 8938 — US taxpayers often need both, as they have different thresholds and different filing deadlines
• Using market value instead of cost for T1135 — Canada's threshold is based on cost, not current value

International crypto tax reporting is complex, but the penalties for non-compliance are real and significant. Generate all your required forms in one place and avoid the costly mistakes.

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