Italy has announced a plan to raise its capital gains tax on Bitcoin and other cryptocurrencies to 42%, a significant jump from the current 26% rate, as revealed during a press conference outlining the country’s 2025 budget on Wednesday.
Aggressive Crypto Tax Policy
The new tax, approved by Italy’s Council of Ministers, is designed to boost government revenue and provide financial support to families, youth, and businesses. The previous 26% capital gains tax had been in place since 2023, with crypto previously treated as foreign currency and taxed at a lower rate for gains exceeding €2,000 ($2,180).
This move positions Italy among countries with some of the highest crypto tax rates globally, signaling the government’s increasing regulatory focus on digital assets. Vice Economy Minister Maurizio Leo, a key advocate of the tax hike, stated that the initiative is part of broader efforts to combat tax evasion and limit cash usage.
Impact on Crypto Trading
While the tax increase is expected to generate additional revenue, it has raised concerns within the crypto community. Many fear that the steep tax hike could discourage trading activity, with investors potentially shifting to offshore platforms, a trend seen in other countries with strict tax regulations, like India.
Prime Minister Giorgia Meloni assured the public that the tax would mainly target cryptocurrency investors, with no major impact on the general population. She emphasized that tax relief for workers would remain in place and that additional resources would be allocated to healthcare.
Global Comparisons and Market Reaction
Despite worries that the new tax policy could dampen trading in Italy, the cryptocurrency market has shown resilience. After the announcement, Bitcoin saw a 4.01% rise, reaching $67,835, demonstrating continued bullish sentiment.
This increase in Italy’s crypto tax follows similar moves in other nations, such as the UK, where discussions about raising taxes on digital assets are ongoing, and India, which introduced harsh crypto tax rules in 2022, causing a drop in trading volumes. As countries continue to regulate and capitalize on the booming crypto sector, Italy’s approach will likely influence its long-term growth within the industry.
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