Crypto Tax Chaos in Italy: Will Traders Finally Get a Break?

The Italian government is revising its plan to impose a 42% tax on cryptocurrency capital gains, originally proposed to fund socio-economic initiatives.  The plan has faced criticism from industry groups and dissent within the ruling League party.

League Party Pushes Back Against Proposed Tax Hike

Economy Minister Giancarlo Giorgetti previously backed a proposed tax hike, aiming to raise €16.7 million annually for public finances. The plan targeted capital gains exceeding two thousand euros from the sale, redemption, or transfer of crypto assets. However, it sparked debate over concerns that it could hinder innovation and deter investors.

The League party, which is pro-business, opposed the tax, arguing it could harm Italy’s competitiveness. They urged a more cautious approach to protect innovation, especially with the EU preparing to introduce the Markets in Crypto-Assets (MiCA) which aims to create a uniform crypto framework. The League party lawmaker Giulio Centemero and Treasury Junior Minister Federico Freni have publicly confirmed that the proposal will undergo substantial revisions. “The tax hike will be significantly reduced during parliamentary work,” they said.

Centemero and Freni have also emphasized the need to shed prejudices against cryptocurrencies, stating, “No more prejudice about cryptocurrencies.” Critics of the proposed tax hike warn that it could push crypto trading into unregulated markets, harming investors and Italy’s economy.

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Focus on Industry Growth and Investor Protection

Supporters of a more balanced approach believe that a gentler tax policy could help the cryptocurrency sector grow while keeping Italy competitive in the global digital economy. Consequently, lawmakers are considering a tax increase to 28%, instead of 42% while exploring ways to maintain the 26% rate, add progressive taxes, and raise exemptions for smaller investors. Members of Italy’s ruling coalition are pushing for amendments to Giorgetti’s original budget plan, which included the contentious 42% tax rate.

These amendments are among more than 300 “priority changes” submitted by the coalition. Although Giorgetti introduced the plan, he has previously signalled his willingness to explore alternative tax structures amid ongoing party disputes.“I am open to different tax models depending on how long the investment has been held,” he said. The proposal, part of Italy’s 2025 budget, aims to balance fiscal needs and support for crypto investors and must be approved by December.

Global Shifts in Crypto Taxation

Italy’s crypto tax debate mirrors global trends as EU countries adjust their regulations on digital assets. In Russia, cryptocurrencies are classified as property, with personal income tax rates of 13% to 15% on crypto sales, while mining operations are VAT-exempt. Meanwhile, the Czech Republic has exempted capital gains tax on crypto assets held for over three years, aiming to foster a more favourable investment environment. Meanwhile, France and Germany are adopting a more cautious approach to crypto taxation.

Conclusion:

As Italy’s parliament prepares to debate the revised 2025 budget, the future of crypto taxation remains uncertain. While the government seeks to address fiscal challenges, lawmakers appear determined to avoid stifling innovation or driving crypto activities underground. The final decision will impact Italy’s cryptocurrency investors while also influencing the nation’s positioning in the rapidly evolving global crypto sector. For now, the Italian government seems poised to chart a more balanced course, emphasizing investor protection and industry growth while meeting its fiscal goals.

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