- Italy’s capital gains tax on crypto could be raised to 28%, down from the 42% initially proposed.
- The League, a junior coalition partner, is advocating for a smaller increase to protect the local crypto industry.
- A proposal to scrap the tax hike entirely is also on the table as Italy seeks to balance public finances.
The Italian government is revising its approach to cryptocurrency taxation. A plan to increase the capital gains tax to 42% has been met with strong opposition from industry leaders, who argue that such a steep hike would harm Italy’s competitiveness within the European Union (EU), according to a recent report.
Now, the government seems set to approve a reduced tax increase of 28%, as proposed by the League, a junior partner in Prime Minister Giorgia Meloni’s coalition. This adjustment aims to ease the burden on the rapidly growing crypto sector globally.
Crypto executives had voiced concerns that the 42% tax, as initially proposed in the government’s budget, would undermine Italy’s attractiveness as a hub for digital assets.
In response, the League has amended the proposal, pushing for a 28% rate instead. The proposal is seen as a compromise, balancing the need for higher revenue with the desire to support the emerging crypto industry.
The amendment also suggests creating a working group involving digital asset firms and consumer associations to promote crypto education and raise awareness among investors.
Simultaneously, another coalition party, Forza Italia, led by the late Silvio Berlusconi’s allies, has proposed scrapping the tax increase altogether. This plan also includes removing the current exemption on gains of €2,000 ($2,120) or less, which had been seen as a tax relief for smaller traders. Forza Italia argues that the steep tax hike is unjustifiable and that the government should explore alternative options.
Balancing Fiscal Policy with Crypto Regulation
The tax debates come at a critical time for Italy, which is under pressure to improve its public finances following the reimplementation of EU fiscal rules.
With growing public debt and low economic growth, Meloni’s government must carefully navigate these challenges while also addressing industry concerns. Meanwhile, other countries, like India, have struggled with crypto taxation, with high taxes causing trading volumes to plummet.
As Italy moves closer to finalizing its decision, the outcome will likely have significant implications for its crypto market, broader fiscal policy, and the future of digital asset regulations in the EU.
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