Crypto watchers and investors in Italy have received encouraging news: Prime Minister Giorgia Meloni’s government is considering a watered-down tax hike. From the initial proposal of 46%, which was announced last second week of October, the Italian government is currently re-evaluating the plan to limit the increase “to just 28%”.
According to multiple reports, the League, a member of Meloni’s coalition, has recommended an amendment to the tax rate. This amendment aims to balance the country’s revenue generation and the policy of attracting local and international investors. Italy’s current levy is 26%.
Tax Hike On Crypto – A Plan To Cut Fiscal Deficit
Italy’s plan to hike taxes on crypto capital gains was first announced on October 16th, 2024. Deputy Finance Minister Maurizio Leo states that the government aims to raise crypto taxes from 26% to 42%. Leo said the cabinet approved the proposal because the “Bitcoin phenomenon” is spreading. The proposal comes as the Italian government strengthens its digital services tax to boost revenues in 2025.
Italy’s Crypto Tax Drama: Possible Relief in the Works
Looks like Italy might backtrack on its original plan to hike crypto capital gains tax to a whopping 42%.
Instead, the government is considering lowering it to 28%, following backlash from lawmakers and the crypto… pic.twitter.com/YE8CCjlyX7
— IBC Group Official (@ibcgroupio) November 13, 2024
A few weeks after the initial announcement, the Italian government has backtracked and now considers a much lower target hike of 28%. Many market analysts and industry stakeholders have expressed concerns about the steep tax hike.
According to analysts, this proposed increase may hurt the country’s competitiveness, especially now that the European Union is preparing to introduce new crypto regulations through its Markets in Crypto-Assets Framework.
Total crypto market cap at $2.85 trillion on the daily chart: TradingView.com
The League Party Offers A Compromise
With growing concerns from many stakeholders, the League Party has submitted a proposal to limit the hike to just 28%. The League Party is a junior member of Meloni’s coalition, which sees the need to identify a middle ground that generates revenues while promoting the growth of digital assets in the country.
The party’s proposal has gained traction among policymakers, and it’s expected to be approved after a few amendments. Furthermore, the proposal suggested creating a working group with representatives from consumer organizations and digital currency firms.
Other Partners Call For A Tax Removal
Other organizations also call for canceling the proposal to tax crypto gains altogether. For example, Forza Italia has recommended a separate amendment that asks for the removal of a tax increase and the cancellation of tax exemption on cryptocurrency gains below €2k.
Forza Italia stated that the initial proposal of 42% was too high, which could harm Italy’s standing among local and international investors. The group is campaigning to create a friendlier environment for investments such as digital assets.
Featured image from International Traveller, chart from TradingView