Italy has revised its proposed capital gains tax on cryptocurrencies, now considering a 28% rate instead of the initially suggested 42%. According to a report from Bloomberg on November 12, sources familiar with the matter revealed that Italy’s government, under Prime Minister Giorgia Meloni, intends to adopt a modest 2% increase from the current 26%, rather than the sharp rise to 42% originally floated.
The decision reflects Italy’s ongoing approach to regulating its growing digital asset market while addressing revenue needs.
From 42% to 28%: A Softer Approach to Crypto Gains
The backtracking on the 42% rate comes after Italy recently implemented a 26% capital gains tax on crypto earnings above €2,000. The higher tax was introduced as part of Italy’s 2023 budget, with the government eyeing additional revenue in response to the surge in digital asset popularity. A 42% tax rate could have reportedly generated around $18 million annually, though the latest 28% proposal is expected to yield considerably less.
Italy’s Minister of Economy and Finance, Giancarlo Giorgetti, has publicly defended the 28% tax as fair and manageable. He reiterated the government’s commitment to balanced regulations for digital assets, aiming to safeguard Italy’s growing crypto industry while ensuring it aligns with the broader fiscal framework.
However, the reasons for the recent reduction to 28% remain unclear, especially considering previous discussions of more aggressive measures.
Italy Seeks to Balance Growth and Regulation
Though lawmakers in Italy must still review and approve the 28% tax, reactions have been mixed. Some officials, like Giulio Centemero of Italy’s Chamber of Deputies, expressed concerns over any new crypto tax increases, labeling the 28% rate potentially “counterproductive” for the country’s budding crypto industry.
Centemero has called for more deliberation on the proposal, voicing fears that excessive taxation might stifle innovation and discourage crypto investors.
The tax adjustment also arrives amid a promising international backdrop for digital assets. Recently, pro-crypto lawmakers won key positions in the U.S., a factor that contributed to a surge in crypto prices, underscoring the growing importance of cryptocurrency-friendly policies in global economies. Italy’s decision to temper its tax rate may reflect a recognition of these market dynamics and an interest in retaining its appeal to crypto entrepreneurs and investors.
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