Italy Mulls Reducing Proposed Crypto Tax Hike from 42% to 28%

Highlights:

• The Italian government intends to raise crypto tax to 28% instead of the proposed 42%.
• Industry concerns grow over high tax rates affecting Italy’s crypto investment appeal.
• Forza Italia proposes scrapping the crypto tax hike and removing exemptions under €2K. 

Italy’s government under Prime Minister Giorgia Meloni plans to raise the country’s capital gains tax on cryptocurrencies to 28% instead of 42%, according to a November 12 Bloomberg report citing sources with knowledge of the matter. Italy currently imposes a maximum tax rate of 26% on crypto trades.

It is unclear why the Italian government scaled back its plans to tax crypto. The price of many cryptocurrencies has surged. This followed a U.S. election where many lawmakers who supported digital asset policies won their races. 

Italy Poised to Water Down Proposed 42% Tax on Crypto Trading

"We believe that such a tax isn't right," said the Forz Italia whip. "Going from 26% to 42% has a reason that isn't widely understood by anyone." pic.twitter.com/LdmvyUMphs

— matthew sigel, recovering CFA (@matthew_sigel) November 12, 2024

Italy Previously Proposed Raising the BTC Capital Gains Tax from 26% to 42%

In October, Italy revealed plans to raise the capital gains tax on Bitcoin (BTC) from 26% to 42%. The change was announced by Deputy Economy Minister Maurizio Leo during a press conference on the 2025 budget plan. Under the new rules, any cryptocurrency gains over €2,000 will be taxed at 42%, up from the former rate. This increase could bring in €4 billion in extra revenue, which Italy plans to use to help families, businesses, and young people. 

JUST IN: 🇮🇹 Italy to raise capital gain tax on #Bitcoin from 26% to 42%.

— Watcher.Guru (@WatcherGuru) October 16, 2024

Industry Concerns and Suggested Changes to Italy’s Crypto Tax Plan

Industry representatives stated that a 42% tax rate could harm Italy’s appeal. This would affect crypto-related businesses like blockchain, digital asset trading, and investment. They argued that a lower tax rate would help maintain Italy’s attractiveness. Both local and foreign investors would benefit from a more competitive tax environment.

Italian Minister of Economy and Finance Giancarlo Giorgetti defended the proposed tax hike as recently as October 31. Giorgetti said he would consider “different forms of taxation for people who keep investments in their portfolio.”

Italian Finance Minister Defends Proposal To Hike Crypto Capital Gains Tax To 42%

Italy’s finance minister defended a proposal to increase the country’s cryptocurrency capital gains tax to 42%. The minister defended the potential increase by saying…https://t.co/JBKkI5e9uR

— Crypto Daily™ (@cryptodailyuk) November 1, 2024

A key member of Prime Minister Giorgia Meloni’s coalition, The League, proposes a 28% tax rate, just 2% higher than the current one. Sources say further changes to the proposal are possible before final approval. The League’s proposal also includes an amendment to establish a permanent working group with crypto firms and consumer associations. This group would be tasked with educating investors about digital assets and providing guidance on the evolving market.

The proposed tax increase is still being reviewed and needs approval from Italian lawmakers. In an October 16 X post, Giulio Centemero, a member of Italy’s Chamber of Deputies, called cryptocurrency taxation “counterproductive” and urged further discussion on the proposal.

Another Coalition Party Proposes Scrapping the Crypto Tax Hike and Exemption on Gains Below €2K

In addition to the League’s amendment, Forza Italia, another party in the coalition, has proposed separate adjustments. This proposal seeks to eliminate the crypto tax increase entirely. It also suggests eliminating the current tax exemption for gains below €2,000. Both proposals indicate that Italy’s ruling coalition may reevaluate tax policies to attract and retain digital asset investments.

Although a final decision hasn’t been made, sources suggest the government may favor adopting the League’s amendment in the final budget. This change could boost Italy’s crypto market as other countries adjust their tax policies.