Italy To Raise Bitcoin Capital Gains Tax From 26% to 42%, Sparking Investor Concerns

Italy is making significant changes to its cryptocurrency taxation , specifically targeting capital gains from Bitcoin.

The government, led by Giorgia Meloni, plans to raise the withholding tax on Bitcoin capital gains from 26% to 42%. This move is part of a broader initiative to bolster government revenues.

Italy Raises Bitcoin Capital Gains Tax

The Italian government has announced plans to increase tax on capital gains from Bitcoin. According to Deputy Minister of Economy Maurizio Leo, the new budget bill proposes raising the tax rate from 26% to 42%.

This change is part of a broader effort to generate additional revenue for the Italian government. The increased tax on Bitcoin capital gains will take effect in the 2025 tax year.

“Tax on capital gains from Bitcoin will rise from 26% to 42%. We aim to remove the €750 million ceiling and the €5 million threshold in Italy, effectively eliminating these limits,” Leo said.

Bad Consequences for Italy

The 42% substitute tax planned for 2025 would be “ fiscally discriminatory and therefore unfair, probably even unconstitutional,” said Federico Ametrano, CEO and co-founder of CheckSig.

“Like all ill-conceived ideas, it would have the damaging effect of causing crypto capital to flee Italy, creating market distortions, and inducing investors to realize capital gains by the end of 2024.”

According to Ametrano, it would create an unreasonable imbalance compared to investments in Bitcoin ETFs , ETCs, and ETPs, which are taxed at 26%.

Finally, the damage to the Italian industry that provides services in the crypto sector would be enormous.

“I hope for a discussion with the Ministry of Economy and Finance, aimed at strengthening tax collection without unreasonable inequalities.”

EU Bitcoin Tax

Taxation of Bitcoin and other cryptocurrencies in the European Union varies significantly by country, reflecting diverse regulatory frameworks.

Germany considers Bitcoin a private currency, with gains tax-free if held for over a year. If sold within a year, gains exceeding €600 are taxed at personal income tax rates. Mining income is also taxed as personal income.

In France , cryptocurrencies are considered movable property and are taxed at a flat rate of 30%. This includes income tax and social contributions. Taxpayers must declare their cryptocurrency holdings, even if not sold.

Spain classifies cryptocurrencies as financial assets, imposing capital gains taxes that range from 19% to 26% based on profit amounts. Residents must declare holdings over €50,000.

The Netherlands treats digital currencies as assets within a wealth tax system. Their value is included in overall wealth calculations and taxed based on a deemed return without a specific capital gains tax for trading.

In Austria , Bitcoin gains are tax-free if held for over a year; otherwise, they face a flat tax rate of 27.5%. Mining is treated as business income.

While the U.K. is no longer part of the EU, it also impacts the context. Bitcoin is considered property subject to capital gains tax with a tax-free allowance of £12,300.