Italian Cryptotax U-turn: New 28% Rate Signals a New Beginning
Since the initial proposal of 46%, announced in the second week of October, the Italian government is currently re-evaluating the plan to limit the increase “to only 28%”.
Cryptocurrency watchers and investors in Italy have received encouraging news: the government of Prime Minister Giorgia Meloni is considering a watered-down tax increase.
According to multiple reports, the League, a member of Meloni’s coalition, has recommended an amendment to the tax rate. This amendment is aimed at balancing the country’s revenue generation and the policy of attracting local and international investors. Italy’s current tax rate is 26%.
It is unclear what might have led the Italian government to scale back its plans to tax cryptocurrencies. The price of many cryptocurrencies has risen after a U.S. election in which many lawmakers who stated they favored digital asset policies won their respective races.
Tax Increase on Cryptocurrencies: A Plan to Reduce Fiscal Deficit
Italy’s plan to increase taxes on crypto capital gains was first announced on October 16, 2024. Deputy Finance Minister Maurizio Leo says the government intends to raise crypto taxes from 26% to 42%.
Leo said the cabinet approved the proposal because the “Bitcoin phenomenon” is spreading. The proposal comes as the Italian government strengthens its digital services tax to raise revenue by 2025.
“Italy’s cryptocurrency tax drama: possible relief in the works It looks like Italy may backtrack on its original plan to raise the crypto capital gains tax to a whopping 42%. Instead, the government is considering reducing it to 28%, following backlash from lawmakers and cryptocurrency,” @IBCGroupio posted on X yesterday.
A few weeks after the initial announcement, the Italian government has backtracked and is now considering a much lower target increase of 28%. Many market analysts and industry stakeholders have expressed concern about the steep tax increase.
The proposed increase is still subject to review and approval by Italian legislators prior to implementation. Giulio Centemero, a member of Italy’s Chamber of Deputies, said in an Oct. 16 post on X that taxing cryptocurrencies would be “counterproductive,” calling for further discussion on the proposal.
According to analysts, this proposed increase may harm the country’s competitiveness, especially now that the European Union is preparing to introduce new crypto regulations through its Cryptoasset Markets Framework.
League Party Offers a Compromise
In the face of growing concern from many stakeholders, the League Party has put forward a proposal to limit the increase to only 28%. The League Party is a minor member of Meloni’s coalition, which sees the need to identify a middle ground that will generate revenue while promoting the growth of digital assets in the country.
The party’s proposal has gained traction among policymakers and is expected to be approved after some amendments. In addition, the proposal suggested creating a working group with representatives from consumer organizations and digital currency companies.
Other Partners Call for Elimination of Taxes
Other organizations are also calling for the complete cancellation of the proposal to tax crypto gains. For example, Forza Italia has recommended a separate amendment calling for the elimination of a tax increase and the cancellation of the tax exemption on cryptocurrency gains below €2,000.
Forza Italia claimed that the initial 42% proposal was too high, which could hurt Italy’s standing among local and international investors. The group is campaigning to create a friendlier environment for investments such as digital assets.
By Leonardo Perez