Italy May Soon Drastically Reduce Cryptocurrency Taxes

The Italian government is reportedly set to approve a more modest tax increase on cryptocurrency transactions, according to a Bloomberg report published on Tuesday, citing sources with direct knowledge of the matter. This move comes as part of ongoing negotiations over local tax policies, with an emphasis on how to handle the growing digital asset market.

Balance Is Key

Under the leadership of Prime Minister Giorgia Meloni, the proposal seeks to raise the tax rate on cryptocurrency trades to 28%, a modest increase compared to the current rate of 26%. This would reflect an attempt by the government to balance the need for higher tax revenues with the desire to remain competitive in the evolving digital economy.

This potential tax increase follows a proposal made last month by the Vice Minister of Economy, Maurizio Leo, who suggested a much steeper hike in the tax on Bitcoin-related gains, raising it to 42%. The proposal was part of discussions aiming to tighten tax regulations as part of broader fiscal reforms. However, the more moderate 28% rate now being considered is seen as a compromise between different political factions within the coalition government.

Some Pushback

In addition to the tax hike, the proposal includes an important amendment that would establish a permanent working group focused on the cryptocurrency sector. This group would bring together stakeholders from crypto companies, consumer associations, and regulatory bodies to work on educating the public about digital assets, risks, and best practices.

The goal is to foster a more informed investor base and ensure that digital asset investments are handled in a manner that protects consumers and supports market stability. Meanwhile, another coalition party, Forza Italia, has pushed back against the proposed tax increase. They have suggested scrapping the planned hike altogether and instead eliminating the current tax exemption for cryptocurrency gains of &euro2,000 ($2,120) or less.

By removing this exemption, Forza Italia argues that the government could simplify the tax system without imposing further burdens on crypto investors. Right now, the final decision remains in flux, as once the new tax rate is decided, it will be reviewed and refined by lawmakers before being formally approved and implemented.