Italy plans to increase Bitcoin capital gains tax from 26% to 42%. This decision is part of measures aimed at funding election promises and reducing the fiscal deficit.

Increase in Capital Gains Tax

The government led by Prime Minister Giorgia Meloni decided to increase the Bitcoin capital gains tax to 42%. Deputy Finance Minister Maurizio Leo announced this during a conference call. The change is in response to the growing prevalence of cryptocurrencies.

Experience of Other Countries

Previous attempts by other countries to tax cryptocurrency trading have not always resulted in increased government revenues. For instance, India's introduction of heavy taxes on digital assets two years ago led to a significant decline in trading volumes, as investors shifted to offshore platforms to avoid the taxes.

Cryptocurrency Market Reaction

Despite the tax hike news, Bitcoin saw a 1.8% increase by 12 p.m. in London on Wednesday, continuing its upward trend with a 17% gain over the past month. This occurs as the European Union prepares to implement its own comprehensive crypto regulations, known as MiCA, by the end of the year.

The increase in Italy's capital gains tax on Bitcoin may significantly impact the cryptocurrency market. Whether this will help boost government revenue remains uncertain given various international examples.