Italy is set to raise its capital gains tax on bitcoin from 26% to 42% as part of a strategy to fund election commitments and address the country’s fiscal deficit. This significant tax hike reflects the government’s response to the increasing adoption of bitcoin, which has gained traction among investors and the broader public.
Deputy Finance Minister Maurizio Leo emphasized the importance of this adjustment during a recent conference call, noting that the popularity of bitcoin is expanding. The tax increase aims to stabilize Italy’s economy, which has faced various financial challenges in recent years.
This move aligns with the European Union’s upcoming implementation of the Markets in Crypto-Assets Regulation (MiCA), scheduled for the end of the year. The MiCA framework seeks to create a unified regulatory approach across the EU, focusing on transparency and consumer protection in the cryptocurrency sector. By raising its tax rates, Italy is attempting to harmonize its crypto policies with the broader EU regulations.
Currently, capital gains from cryptocurrency investments exceeding €2,000 (approximately $2,171) are taxed at the existing 26% rate, classified as “miscellaneous income.” Additional income derived from activities such as mining or NFT sales is subject to income tax rates ranging from 23% to 43%. The current capital gains tax applies to profits generated from converting cryptocurrencies into euros, trading NFTs for cryptocurrencies, or using digital assets for purchases.
Despite the tax increase announcement, bitcoin’s value continues to climb, indicating strong investor confidence in the market. As of now, bitcoin is trading at approximately $67,758, demonstrating resilience against regulatory pressures.
The Italian government’s decision reflects a broader trend as countries around the world grapple with how to regulate and tax digital assets. Previous attempts by various nations to impose taxes on cryptocurrencies have encountered hurdles, as some investors have sought to evade high tax rates by moving their activities to offshore platforms. Italy’s approach signals a commitment to not only tax these assets but also to align with evolving European regulations.
