Italian Deputy Economy Minister Maurizio Leo today announced that Italy is considering increasing the capital gains tax on Bitcoin (BTC) and other crypto assets from 26% to 42%.
Italy Weighs Higher Bitcoin Capital Gains Tax
With a news conference on October 16, 2024, Leo stated that Giorgia Meloni’s government is considering a significant increase in the withholding tax on crypto-related capital gains, from 26% to 42%.
The proposed 16% increase is part of Italy’s new budget law, which was approved by the country’s Council of Ministers on October 15, 2024. The broader goal of the bill is to generate resources for young people, businesses and families.
It is worth noting that since the 2023 tax year, capital gains over $2,180 have been subject to a 26% tax, following the introduction of cryptocurrency-specific rules aimed at streamlining the tax treatment of digital assets.
In particular, the tax laws on crypto capital gains introduced last year marked a significant policy shift from treating digital assets as foreign currencies, which meant lower taxes.
During the press conference, Leo reportedly said that Italy plans to restrict the use of cash to tackle money laundering and tax evasion.
The Italian position on digital assets is not particularly unconventional. Because Bitcoin and other cryptocurrencies operate largely in a regulatory gray zone – with perceived risks of money laundering and tax evasion – financial watchdogs worldwide have been cautious in setting policies for digital assets.
In June 2024, the Bank of Italy and Consob – the Italian market regulator – connected forces to tackle illegal crypto use by strengthening anti-money laundering (AML) compliance.
Italy’s regulatory approach mirrors that of the European Union (EU), as crypto-related crimes continue to increase across Europe. Several countries have done that introduced strict cryptocurrency regulations to prevent the misuse of digital assets illegal activities.
Strict European regulations are crowding out exchanges
While digital assets promise greater transparency and speed in financial transactions, their potential for unlawful use has raised concerns among Europe’s financial watchdogs. As a result, many exchanges have faced regulatory pressure.
One of the victims of Europe’s strict crypto regulations is the leading digital currency exchange, Binance. In June 2023, the German financial regulator rejected Binance’s request to offer Bitcoin and other crypto custody services in the country.
In the same month, Binance confronted allegations of “aggravated money laundering” in France. The exchange was also accused of offering unauthorized digital asset services to French citizens.
Similarly, Binance was also expelled from other European countries such as the The Netherlands And Austria, due to strict regulations surrounding digital assets.
However, despite the regulatory hurdles, companies are not shying away from embracing cryptocurrencies wherever possible.
For example, in July 2024, the Italian luxury sports car manufacturer Ferrari announced expanding its crypto payment options – accepting Bitcoin, Ethereum (ETH) and USDC – to its European dealers. BTC is trading at $67,430 at the time of writing, down 0.5% in the past 24 hours.
Featured image from Unsplash.com, chart from TradingView.com