Italy is set to increase the capital gains tax on Bitcoin from 26% to 42% as part of a broader tax reform aimed at bolstering public finances. The announcement was made by Deputy Economy Minister Maurizio Leo during a press conference on October 16, 2024. The proposed changes are part of Italy’s budget for 2025, which is awaiting parliamentary approval.

Targeting High-Value Gains

The new tax structure will primarily affect crypto investors with profits exceeding €2,000. The increase in tax rates is designed to capture more revenue from larger investors profiting from the rapidly growing cryptocurrency market. This shift could have significant implications for Italy’s crypto community, particularly for those engaged in high-value trading.

If approved, the tax hike could position Italy among the countries with the highest capital gains tax rates on digital assets. While it primarily targets large-scale investors, the broader impact on Italy’s burgeoning crypto market remains uncertain. Experts warn that such a steep tax increase may deter investment and stifle innovation within the sector.

Broader Tax Reforms Ahead

Alongside the Bitcoin tax increase, the Italian government is also proposing reforms to the Digital Services Tax (DST). Currently, the DST applies to online companies with global earnings of at least £750 million, including a threshold of £5.5 million generated within Italy. The new proposal aims to eliminate these thresholds, expanding the tax base to encompass more digital service providers operating in the country.

Financial Goals and Future Outlook

The planned tax changes come as Italy seeks to generate £3.5 billion from local banks and insurers to support its proposed budget. Prime Minister Giorgia Meloni highlighted that the funds will aid vulnerable communities and enhance essential services across Italy. The parliament is expected to vote on the budget proposal, which includes the tax increases, before the end of the year, with the new measures set to take effect in 2025.