The Italian government may abandon plans to increase the tax on cryptocurrency profits from 26% to 42% following backlash from the industry and within the ruling coalition.
The Italian government is reconsidering plans to raise taxes on cryptocurrency profits after facing strong opposition from industry stakeholders and divisions within the ruling coalition.
The initial proposal, presented as part of the 2025 budget, aims to increase the tax on cryptocurrency profits from 26% to 42%. The government's goal is to generate an additional 16.7 million euros annually for the national budget.
However, the figure, while relatively small compared to the overall budget, has sparked fierce debate. Economy Minister Giancarlo Giorgetti, who initially strongly supported the proposal, is facing pressure from members of his own party.
The Liga party, a key member of the ruling coalition and known for its pro-business stance, has spoken out against the tax hike plan, arguing that it would be detrimental to the development of Italy’s nascent cryptocurrency industry.
Legislator Giulio Centemero and Deputy Finance Minister Federico Freni, both from the Liga party, confirmed on December 10 that the tax increase would be significantly reduced following parliamentary discussions. According to political sources, the government may decide to keep the current tax rate at 26% to allay concerns about the policy’s potential negative impact on the digital asset industry.
The pressure to balance finance and innovation
Critics of the proposed tax hike warn that the sudden tax hike would push cryptocurrency investors and businesses “underground,” undermining transparency and stifling economic growth.
They argued that a stable and competitive regulatory environment is necessary to attract investment and foster innovation in the sector. Centemero and Freni called for balanced regulation that encourages innovation rather than inhibits market participation, and asserted that Italy will no longer tolerate “prejudice against cryptocurrencies.”
The Liga party argues that a less aggressive approach would be more in line with Italy’s broader economic goals. It warns that the country would lose its competitive edge if it chooses to “punish innovation” and calls for a more cautious and flexible regulatory strategy. Balancing the government’s financial needs and creating a favorable environment for the growth of the cryptocurrency industry is a major challenge for Italian policymakers.
The revised budget draft, which includes an adjustment to the stance on cryptocurrency taxation, is expected to be finalized and submitted to parliament for approval by the end of December.