Itay Shocks With Increase In Bitcoin Capital Gains Tax From 26% To 42%: Internet Reacts Strongly

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During Budget 2025 press conference, Italy’s Deputy Minister of Economy Maurizio Leo announced an increase in Bitcoin capital gains tax to 42%. “For capital gains from bitcoin, we expect an increase in withholding tax from 26% to 42%,” said Leo.

On 16 October 2024, local media reported that the Italian government introduced the Bitcoin capital gains tax revision along with many other anti-evasion rules and regulations.

Meanwhile, investors fear that higher taxes might dampen crypto enthusiasm in the country. In fact, some went on to declare that they are leaving the country, based on this crypto tax revision.  

Is the growing popularity of digital assets in Italy being leveraged to support economic objectives or to finance election promises? Italians expressed frustration on X. A user said that innovation in his country “is doomed.” 

Is A Crypto Related Tax Hike Being Introduced To Deal With  Current Financial Challenges?

Well, yes! The increased tax revenues from cryptocurrencies could help address budgetary constraints and fund public initiatives.

Historically, Italy imposed a 26% tax on cryptocurrency gains exceeding €2,000. The new 42% rate represents a significant increase.  

Leo highlighted the move as a response to Bitcoin’s rising popularity, describing it as a “spreading phenomenon”. Hence, it is visible that the tax hike is intended to generate additional revenue for the government, which is grappling with financial challenges.

Italy’s decision comes against a backdrop of relatively low inflation compared to other European countries. As of September 2024, Italy’s inflation rate was 1.2%, providing some economic stability amid broader fiscal challenges.

Read more: Italy Intensifies Crypto Market Surveillance To Comply With EU’s MiCA Regulatory Framework

Italy’s Crypto Regulations Comes Under Scrutiny

Italy continues to remain on top of crypto regulation. The European Union (EU) is also preparing to implement new regulations under the Markets in Crypto-Assets (MiCA) framework, expected to be fully operational by the end of the year.

In July 2024, Italy implemented guidelines for crypto regulation in accordance with the EU’s MiCA law. 

Italy’s move is part of a broader global trend where governments are increasingly regulating cryptocurrencies. For instance, India implemented stringent digital asset taxes, which led to a shift in trading activity to offshore platforms.

Related : Bank Of Italy Set To Release MiCA-Based Crypto Guidelines In “Coming Days”

Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.

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