To boost funding for public services, the government of Italy intends to raise the capital gains tax on Bitcoin from 26% to 42%.
To provide financial support for public services, the Italian government intends to increase the capital gains tax on Bitcoin substantially. The tax increase is a component of a more comprehensive strategy currently pending parliamentary approval in the country’s 2025 budget proposal.
During a press conference on Wednesday, October 16, the country’s Deputy Economy Minister, Maurizio Leo, disclosed the proposed changes. He stated that the current capital gains tax rate of 26% would be significantly increased to 42% under the new budget, which would apply to profits from BTC and other crypto investments.
Additional Tax Reforms in the Budget
In the past, crypto traders who earned more than €2,000 were subject to a 26% tax. Nevertheless, the announcement indicates that the new modification intends to concentrate on the high-value gains larger investors achieve.
The initiative is a component of the government’s endeavor to increase revenue from the expanding economy. If approved, the tax hike could significantly impact Italy’s crypto community, particularly for those who profit from trading digital assets.
Although the tax is primarily intended for large-scale investors, the overall effect on Italy’s expanding crypto market is still being determined. The European nation could become one of the countries with the highest capital gains tax rates on digital assets if the proposal is passed, which could discourage some investors.
A Reform That Was Premeditated
The government intends to modify the Digital Services Tax (DST) and propose increasing the Bitcoin tax.
Initially implemented in 2019, the DST is currently applicable to online companies that generate a minimum of £5.5 million within Italy and earn a minimum of £750 million globally. The new proposal aims to eliminate these thresholds, expanding the tax base to encompass a more significant number of digital service providers operating within the country.
The action is a component of the Italian government’s strategy to modernize its tax system, guaranteeing that the digital economy, which encompasses cryptocurrencies and technology companies, contributes somewhat to public finances.
“The withholding tax on capital gains from Bitcoin has been raised from 26% to 42%.” The Minister stated that the thresholds are being eliminated to eliminate the ceiling of 750 million euros and 5 million in Italy for web tax revenues.
The 2025 budget proposal, which encompasses the Bitcoin tax hike and DST reforms, has yet to be finalized. The bill is anticipated to be voted on by the Italian parliament before the end of the year. The new taxes will be implemented in 2025 if the bill is approved.
Italy is expected to generate £3.5 billion from local banks
Less than a day after the country disclosed its intention to raise £3.5 billion from local banks and insurers to finance its proposed budget, the proposed tax hike and modifications to the DST are in the works.
Giorgia Meloni, the country’s Prime Minister, stated in a report published by Reuters on Tuesday that the funds generated from these new tax measures would enhance essential services and support vulnerable communities.
