Italy mulls raising Bitcoin capital gains tax above 40% as crypto gaining momentum: report

Italy is considering increasing capital gains tax on crypto to 42% as part of efforts to reduce the fiscal deficit.

Bitcoin (BTC) holders in Italy may soon face a nearly double tax increase as the government plans to increase the capital gains tax on cryptocurrencies from 26% to 42%, Bloomberg reports.

Italy’s deputy finance minister, Maurizio Leo, said in a conference call on Wednesday that the government was responding to the rapid growth in crypto usage and that the phenomenon was rapidly “spreading.” However, the report did not provide a timeline for when the new tax could be implemented.

Italy is not alone in its approach to crypto taxation. Other countries such as India are grappling with similar issues, leading to declines in local trading volumes as investors shift to offshore markets.

Italy is on a deep-rooted path

As Crypto.news previously reported, crypto trading and mining profits in India are subject to a flat tax of 30%. Staking income is also taxed, but potentially at a lower rate depending on the individual’s income tax bracket.

The potential tax increase coincides with Italy’s preparations to adopt European Union Crypto Asset Market regulations, which are scheduled to come into force at the end of 2024.

The proposed changes could potentially reshape Italy’s crypto landscape. In early July, Bank of Italy Governor Fabio Panetta pointed to the selective application of these rules, arguing that MiCA, which includes provisions for electronic money tokens and asset-referenced tokens, could conflict with existing Italian law.