Italy Bitcoin Tax Will Increase To 42% Amid Fiscal Strategy

Key Points:

• Italy plans to raise the capital gains tax on Bitcoin from 26% to 42% to help fund election promises and reduce the fiscal deficit.
• The Italy Bitcoin tax increase mirrors similar discussions in the UK and follows the EU’s upcoming implementation of its crypto regulation package, MiCA, by year-end.

Italian government is planned to more than double the capital gains tax on Bitcoin, starting from 26 to 42 percent, as part of a wider fiscal plan to finance pricey election promises while shaving off the budget deficit.

Read more: Italy’s Securities Regulator Blocks Illegal Crypto Trading Platforms

Italy Bitcoin Tax Upped to 42%

That decision, just approved by the cabinet of Prime Minister Giorgia Meloni, reflects the increasing prevalence of cryptocurrency, according to Deputy Finance Minister Maurizio Leo, speaking on the issue at a recent conference.

This move represents a major policy shift in Italy’s approach to the taxation of cryptocurrency. For the 2023 tax year, capital gains above €2,000 were taxed at 26%, a long way from crypto’s previous classification as foreign currency that was taxed at a far lower rate.

The new Italy Bitcoin tax rate is expected to improve Italy’s fiscal position, though global precedents indicate mixed results from such steps. For instance, India imposed severe crypto taxes two years ago but saw a precipitous decline in domestic trading volumes as investors fled onto offshore platforms to avoid the levies. Italy is, however, not deterred by this experience and is so determined to make money from the fast-growing crypto sector.

EU Crypto Regulations and Bitcoin Resilience in the Market

Italy Bitcoin tax hike comes when the European Union is getting ready to roll out its MiCA regulations before the end of the year. The new regulations also seek to establish a legal framework for digital assets across the block. Despite that, Bitcoin appeared resilient on the back of the tax news, trading 1.3% higher at $68,000 on Wednesday.

The move is also supported by the recent claims of Prime Minister Meloni that no new general tax policies are contemplated, but only specific measures, as in the case of cryptocurrency.