Italy plans to raise cryptocurrency capital gains tax to 42%
3 min readItaly plans to raise the capital gains tax on Bitcoin and other cryptocurrencies to 42%, the country announced Wednesday at a press conference announcing its 2025 budget.
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🇮🇹 Italy will raise capital gains tax on Bitcoin (BTC) from 26% to 42%. The development could lead to crypto investors leaving the country or looking for other avenues. pic.twitter.com/hnU9rh5t2m— Federico Izzi (@zioromolo) October 16, 2024
The increase, which is intended to provide additional resources for families, young people and businesses, is a significant increase from the current 26% rate, which takes effect in 2023.
Italy’s Aggressive Crypto Tax Policy
The new tax, approved by Italy’s Council of Ministers, reflects the government’s efforts to support the economy by leveraging investment-based returns, according to local reports.
The move coincides with similar discussions taking place in the UK, where Prime Minister Rachel Reeves is reportedly considering raising capital gains tax on digital assets.
Italy is imposing a 26% tax on capital gains exceeding €2,000 ($2,180) starting in 2023, and previously treated cryptocurrencies as foreign currency, subject to a lower rate.
The increase to 42% makes Italy one of the countries with the highest tax rates on digital assets, underscoring the growing regulatory scrutiny of the cryptocurrency sector.
Economy Minister Maurizio Leo, a key figure behind the tax initiative, said Italy planned to crack down on the use of cash as part of efforts to curb tax evasion.
While the move is intended to increase tax revenues, market participants are concerned that the tax hike could discourage cryptocurrency trading activity in the region.
Many investors may be discouraged by the increased tax burden, a trend observed in other countries with similar policies, potentially pushing traders to offshore platforms.
Italian Prime Minister Giorgia Meloni has reassured the public that the new general tax policy will not affect most of the population and that the tax increases will be focused specifically on the cryptocurrency sector.
Oggi, in Consiglio dei Ministri, abbiamo varato la legge di bilancio, un intervento che mette al centro i cittadini, le famiglie e il rilancio della nostra Nazione.
Come avevamo promesso, non ci saranno nuove tasse per i cittadini. Inoltre, rendiamo strutturale il taglio delle… pic.twitter.com/scgmgnzBw9
— Giorgia Meloni (@GiorgiaMeloni) October 15, 2024
She added that tax breaks for workers would remain in place and additional money would be allocated to health care.
Market Reactions, Global Comparisons and Potential Impact
Despite concerns that higher taxes could slow trading activity in Italy, cryptocurrency markets are showing signs of recovery.
Following the announcement, Bitcoin surged 4.01% intraday to $67,835 before falling to $64,954.
$67,835.33
— Bitcoin (@Bitcoin) October 16, 2024
The overall cryptocurrency market continues to show strength, with Bitcoin continuing its upward trend thanks to strong institutional interest.
Italy’s tax hike follows a broader trend among countries seeking to regulate and profit from the booming cryptocurrency market.
For example, India introduced a strict digital asset tax in 2022, which led to a sharp decline in local trading volumes.
Similar concerns have been raised in Italy, where higher tax rates could discourage retail investors from participating in the market.
Italy’s inflation rate, which hit 0.7% in September, may provide some economic stability, but questions remain as to how the new taxes will impact Italy’s growing crypto sector in the long term.
