Emily Walker
Investors and crypto enthusiasts in Italy have some positive updates: the government led by Prime Minister Giorgia Meloni is reconsidering a revised tax increase. Originally set at 46%, officials are now looking to adjust this to a more manageable 28%.
Reports indicate that the League party, part of Meloni’s coalition, has proposed a change to the tax plan. This adjustment aims to balance revenue needs with the goal of attracting both local and global investors. Currently, Italy’s tax on cryptocurrency stands at 26%.
Tax Increase on Crypto – A Strategy to Reduce Fiscal Deficit
The idea to increase taxes on crypto capital gains was first unveiled on October 16, 2024. Deputy Finance Minister Maurizio Leo highlighted that the government seeks to raise the tax from 26% to 42%, citing the growing popularity of Bitcoin. This initiative aligns with Italy’s efforts to reinforce its digital services tax ahead of 2025.
Italy’s Crypto Tax Drama: Possible Relief in the Works
It seems that Italy may reconsider its initial proposal to hike the crypto capital gains tax to 42%.
Instead, the government is looking at reducing it to 28%, responding to feedback from lawmakers and the crypto community… pic.twitter.com/YE8CCjlyX7
— IBC Group Official (@ibcgroupio) November 13, 2024
Shortly after the tax increase announcement, the Italian government reconsidered, proposing a lower tax hike of 28%. This shift comes as many in the market raised alarms about the initial steep increase.
Analysts warn that such a hike could diminish Italy’s attractiveness, particularly as the European Union prepares to unveil new regulations on crypto under the Markets in Crypto-Assets Framework.
League Party’s Compromise Proposal
Due to rising concerns from various stakeholders, the League Party has put forward a suggestion to limit the tax increase to 28%. As a junior partner in Meloni’s coalition, the League recognizes the importance of maintaining a balance between generating tax revenue and fostering the growth of digital assets within Italy.
The party’s proposal is gaining admiration among lawmakers and is expected to move forward following some modifications. Additionally, it proposes forming a working group that would consist of representatives from consumer advocacy groups and digital currency businesses.
Other Groups Advocate for Tax Cancellation
Some groups are advocating for the outright cancellation of the crypto tax proposal. For instance, Forza Italia has presented an amendment that seeks to eliminate the tax hike and to remove tax exemptions for cryptocurrency gains under €2,000.
Forza Italia argues that the original tax proposal of 42% was excessively high, potentially damaging Italy’s reputation as a favorable location for both domestic and international investors. They aim to foster a more welcoming environment for investments, including in digital assets.
Featured image from International Traveller, chart from TradingView