Italy Boosts Crypto Taxes: Capital Gains Tax on Bitcoin to Rise from 26% to 42%

Italy to Raise Capital Gains Tax on Bitcoin to 42%

Italy is set to increase the capital gains tax on Bitcoin from 26% to 42%, as part of its new budget draft. The aim is to collect 0.2% of the gross domestic product (GDP), around 4 billion euros, by 2025. Most of the revenue would come from new taxes on banks, insurance products, and gaming industry licenses, but the taxation of Bitcoin would also play a significant role.

This tax increase will make Italy one of the highest crypto-related tax burdens in the world. The decision could have a serious impact on cryptocurrency investors, who may look for alternative solutions or even move their investments to other countries. The Italian government has already raised the exchange rate profit tax on cryptocurrencies in 2023, increasing capital gains tax to 26%.

This tax increase was part of broader financial reforms aimed at tightening the regulation of crypto-investments and increasing tax revenues. The Italian economy is currently experiencing declining inflation, which fell below 1% in September, putting further pressure on the European Central Bank to cut interest rates.

Lower interest rates could make higher-risk assets, such as Bitcoin, more attractive to investors. This is why the Italian government is likely expecting crypto investment to grow and is trying to generate more revenue from it. The introduction of a higher capital gains tax of 42% is expected to dampen interest in Bitcoin in Italy, as the significant tax burden may deter many investors.

This move could encourage crypto investors to look for countries with more favorable tax conditions. While the crypto market, especially in October, has traditionally shown strong performance, the introduction of new tax policies could cause concern among market participants and make investors cautious.

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