Italy Plans to Increase Bitcoin Capital Gains Tax from 26% to 42%

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As an experienced crypto investor with roots deeply entrenched in the Italian economy, I find myself contemplating the proposed tax hike on Bitcoin and other digital assets by the Italian government. With a career spanning decades and witnessing numerous changes in the market, I must admit, this move leaves me somewhat apprehensive.

The Italian administration is contemplating an elevated levy on Bitcoin profits to finance public amenities. This tax rise forms part of a wider strategy outlined in their 2025 budget blueprint, which is under review by the parliament at present.

During a press conference held on October 16th, Deputy Economy Minister Maurizio Leo unveiled proposed adjustments. He revealed that under this revised budget, earnings from Bitcoin and other cryptocurrency investments would be subjected to a capital gains tax of 42%, which is substantially higher than the current rate of 26%.

Broader Tax Reforms in the Budget

Earlier, individuals who made more than €2,000 from cryptocurrency trading were subjected to a 26% tax. But as per the recent announcement, the revised policy seems to focus on taxing substantial profits reaped by significant investors.

The action is an aspect of the government’s strategy to collect higher taxes from the swiftly expanding economy. If enacted, the proposed increase in taxes might significantly affect Italy’s cryptocurrency sector, especially for individuals earning profits through digital asset trading.

It’s worth noting that the proposed tax mainly affects large-scale crypto investors. However, its ultimate effect on Italy’s burgeoning cryptocurrency market is yet to be determined. If this bill gets approved, Italy could find itself among countries with steep capital gains taxes on digital assets, which might deter some investors due to the high tax rates.

A Planned Reform

Apart from suggesting a hike in the Bitcoin tax, the government also intends to revamp the Digital Services Tax (DST).

Initially implemented in 2019, the Digital Services Tax (DST) targets online businesses that have a global revenue of at least £750 million and generate at least €5.5 million within Italy. The recent proposal aims to remove these thresholds, expanding the tax scope to encompass additional digital service providers operating in the country.

This action aligns with Italy’s plan to update their tax structure, guaranteeing that sectors like digital economies (including cryptocurrencies) and tech firms pay a fair share towards the nation’s financial resources.

The Minister mentioned that the rate for capital gains tax on Bitcoin will rise from 26% to 42%. Regarding web-based tax revenues, efforts are being made to remove the cap of 750 million euros and 5 million euros in Italy. This means we are getting rid of the limits or thresholds.

The 2025 budget proposal, including the Bitcoin tax hike and DST reforms, has not yet been finalized. The Italian parliament is expected to vote on the bill before the end of the year. If the bill is approved, the new taxes will take effect in 2025.

Italy to Generate £3.5 Billion from Local Banks

The planned tax hike and changes to the DST come less than a day after the country revealed its plans to generate £3.5 billion from local banks and insurers to fund its proposed budget.

Based on a Reuters report released on Tuesday, Italy’s Prime Minister Giorgia Meloni stated that the income derived from these fresh tax policies will be used to bolster disadvantaged groups and enhance vital services nationwide.

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2024-10-16 17:54