The Italian government is considering reducing its proposed capital gains tax on crypto trades. Originally set to rise to 42%, the new plan would cap the increase at 28%. The change is expected to be approved by the coalition government, according to sources familiar with the matter.
This proposal comes from the League, a junior partner in Prime Minister Giorgia Meloni’s government. It aims to ease concerns from the crypto industry, which argued that the higher tax rate would make Italy less competitive in the European Union. Currently, the tax stands at 26%.
Alongside this, Forza Italia, another coalition party, has proposed scrapping the tax increase altogether. They also want to eliminate an exemption for gains under €2,000 ($2,120). The League’s amendment also includes plans to form a working group of digital-asset firms and consumer groups to educate the public about crypto.
Government faces pressure to rethink crypto tax strategy
Despite the ongoing discussions, no final decision has been made. The government is expected to approve the League’s proposal but may modify it. Finance Minister Giancarlo Giorgetti has hinted at considering different tax models based on how long an investment has been held.
The same proposed hike was criticized by Paolo Barelli from Forza Italia, who described the jump from 26% to 42% as an unjustifiable leap. For him, the tax change had to be explained more clearly to citizens and investors.
Italy is currently balancing public finances amidst economic challenges. For the government, it means retaining a policy of not taking aggressive tax measures on crypto, unlike in countries such as India, whose high taxes on crypto have seen local trading volumes tumble. Optimism for cryptocurrencies has lately lifted in light of fresh political developments in the U.S. Bitcoin, in particular, has gained massively.
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