Italy Weighs Higher Bitcoin Capital Gains Tax

At a news conference on October 16, 2024, Maurizio Leo stated that the Giorgia Meloni administration is contemplating a significant increase

Italy is considering raising the capital gains tax on Bitcoin (BTC) and other crypto assets from 26% to 42%, Deputy Economy Minister Maurizio Leo announced on Wednesday.

At a news conference on Oct. 16, Leo stated that the Giorgia Meloni administration is proposing to increase the withholding tax on capital gains from crypto to 42% from the current 26%. The proposed 16% hike is included in Italy’s new budget bill, which was approved by the country’s Council of Ministers on Oct. 15. The broader aim of the bill is to generate resources for families, youth, and businesses.

To put things in perspective, capital gains above $2,180 have been subject to a 26% tax since the 2023 tax year, following the introduction of cryptocurrency-specific rules that aim to streamline the tax treatment of digital assets. Notably, the crypto capital gains tax laws introduced last year marked a shift from treating digital assets as foreign currency, which attracted lower taxes.

During the press conference, Leo also mentioned that Italy plans to reduce cash usage to combat money-laundering and tax evasion.

Considering that Bitcoin and other cryptocurrencies largely operate in a regulatory gray area — with perceived risks of money laundering and tax evasion — financial watchdogs around the world have been cautious when crafting policies for digital assets.

In June, the Bank of Italy and the Consob, the Italian market regulator, joined forces to crack down on illicit crypto use by strengthening anti-money laundering compliance.

Italy’s stance on digital assets mirrors that of the European Union, with crypto-related crimes on the rise across Europe. Several countries have introduced strict cryptocurrency regulations to curb the misuse of digital assets for illegal activities.

While digital assets promise greater transparency and speed in financial transactions, their potential for unlawful use has raised concerns among European financial watchdogs.

As a result, many exchanges have faced regulatory pressure. One of the victims of Europe’s stringent crypto regulations is the leading digital currency exchange Binance.

In June 2023, the German financial regulator rejected Binance's request to offer Bitcoin and other crypto custody services in the country. Around the same time, Binance faced allegations of “aggravated money laundering” in France. The exchange was also accused of offering unauthorized digital asset services to French citizens.

Binance was similarly pushed out of other European countries, including the Netherlands and Austria, due to strict regulations around digital assets.

Despite the regulatory hurdles, businesses are increasingly embracing cryptocurrencies where possible. For instance, in July, Italian luxury sports car manufacturer Ferrari announced that it will begin accepting Bitcoin, Ethereum and USDC at its European dealerships.

BTC is trading at $67,430 at press time, down by 0.5% over the past 24 hours.

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