The Italian government, under the direction of Deputy Economy Minister Maurizio Leo, is contemplating a significant increase in the capital gains tax on Bitcoin investments, proposing a jump from the current 26% to 42%. This announcement was made during a press conference at Palazzo Chigi, coinciding with the unveiling of Italy’s new budget bill approved by the Council of Ministers.
Leo highlighted the proposed changes during the discussion on the budget, noting the need to adjust tax regulations to reflect the evolving economic landscape and digital transactions. The increase in Bitcoin capital gains tax is seen as a move to align it with higher revenue-generating assets, considering the substantial profits often associated with cryptocurrency investments.
Digital Services Tax (DST) Revisions
In addition to the changes in Bitcoin taxation, the Italian government is also revising its approach to the Digital Services Tax (DST). Introduced in 2019, the DST initially targeted large tech companies with significant digital service revenues in Italy. The new proposal aims to remove the previous revenue thresholds of 750 million euros globally and 5.5 million euros within Italy, potentially broadening the tax’s applicability to smaller companies engaged in digital activities.
The proposed changes are part of a broader financial strategy encompassed in Italy’s 2025 budget plan, which forecasts expenditures of 30 billion euros. This budget is expected to be partially funded by a new levy on Italian banks and insurers. On October 15, just a day before the announcement, Prime Minister Giorgia Meloni revealed plans to generate an additional 3.5 billion euros from these sectors to bolster public services and support vulnerable population segments.
Meloni assured that these measures would not result in new taxes for the general populace, focusing instead on enhancing healthcare and other critical services.
Parliamentary Process and Public Reaction
The budget measures, including the tax adjustments, are pending approval from the Italian parliament, with a final decision expected by the end of the year. The proposal has stirred various responses, ranging from support for its potential to increase state revenues without burdening individual taxpayers, to concerns about its impact on Italy’s burgeoning digital economy and investment climate.
The proposed increase in Bitcoin capital gains tax could have significant implications for cryptocurrency investors and the broader financial technology sector in Italy. While it may increase government revenue, there is also concern about the potential deterrent effect on investment in digital assets and the innovation ecosystem.
| Country | Crypto Capital Gains Tax Rate |
|---|---|
| Italy (Proposed) | 42% |
| USA | Up to 37% |
| Germany | Up to 45% (under certain conditions) |
| Japan | Up to 55% |
The Italian government’s proposal to increase the capital gains tax on Bitcoin from 26% to 42% marks a significant shift in policy as it aims to adapt to the financial shifts brought by digital currencies. By revising the DST and reevaluating cryptocurrency taxation, Italy is taking steps to ensure its fiscal policies keep pace with technological advancements. As the proposal moves through parliament, its potential impacts on the digital economy and investment patterns will be closely watched by both national and international observers.
Featured image credit: Tanya Lapko via Unsplash
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