Italy plans to raise the capital gains tax on Bitcoin from 26% to 42% to fund election promises and reduce the fiscal deficit.
New Bitcoin Tax in Italy
The decision to increase the tax was approved by the cabinet of Prime Minister Giorgia Meloni. Deputy Finance Minister Maurizio Leo states that this move reflects the growing prevalence of cryptocurrencies. The new tax regime marks a significant policy shift in Italy's approach to digital currencies. Previously, for the 2023 tax year, capital gains above €2,000 were taxed at 26%.
EU and Market Reactions
The tax hike on Bitcoin in Italy coincides with the impending EU rollout of the MiCA crypto regulatory framework. Despite the tax news, Bitcoin showed resilience, trading 1.3% higher at $68,000. Prime Minister Meloni affirmed that no broader tax policies are being considered, although cryptocurrencies are treated as a specific case.
Implications for the Crypto Industry
Italy aims to improve its fiscal outlook with the new Bitcoin tax, but global experiences indicate mixed outcomes. For example, similar measures in India led to a drop in domestic trading volumes as traders moved to offshore platforms.
The increase in Italy's Bitcoin capital gains tax represents a significant step in regulating cryptocurrencies as a fiscal policy. The impact on the market in the long term remains to be seen, though it is part of a broader strategy to strengthen Italy's economic plans.
