Italy has recently announced plans to increase its capital gains tax on Bitcoin and other cryptocurrencies to 42%, a significant jump from the existing 26% tax rate. This decision was made during a press conference outlining the country’s 2025 budget and is aimed at generating additional resources for families, youth, and businesses. The move is part of the government’s efforts to leverage investment-based profits to support the economy, with similar discussions also taking place in the UK regarding increasing capital gains taxes on digital assets.
Since 2023, Italy has taxed capital gains exceeding €2,000 at 26%, with previous rules treating crypto as foreign currency and imposing lower tax rates. The increase to 42% places Italy among the countries with the highest tax rates on digital assets, reflecting the increasing regulatory scrutiny in the crypto space. Vice Economy Minister Maurizio Leo highlighted that Italy also plans to crack down on cash usage to combat tax evasion, although this move may have unintended consequences for crypto trading activity in the region.
Italian Prime Minister Giorgia Meloni reassured the public that the tax increases would primarily focus on the cryptocurrency sector and would not affect most citizens with regards to general tax policies. She also emphasized that tax relief for workers would remain intact and additional funds would be allocated to healthcare. Despite concerns about the tax hike potentially slowing down trading activity in Italy, the cryptocurrency market has shown resilience, with Bitcoin surging 4.01% intraday following the announcement.
Italy’s tax increase on cryptocurrencies is part of a global trend where countries are looking to regulate and profit from the booming cryptocurrency market. India, for example, introduced stringent digital asset taxes in 2022, leading to a decline in local trading volumes. Similar concerns exist in Italy, as higher tax rates could discourage market participation, especially from retail investors. The broader crypto market continues to exhibit bullish sentiment, with Bitcoin benefiting from heightened institutional interest.
Italy’s inflation rate, which stood at 0.7% in September, may offer some economic stability, but questions remain about how the new tax policy will impact the country’s growing crypto sector in the long term. Market participants are monitoring the situation closely to assess the potential impact on trading activity and investor sentiment. Despite these uncertainties, Italy’s aggressive crypto tax policy reflects a broader effort by governments to increase revenue and regulate the rapidly evolving cryptocurrency industry.
