Italy is preparing to raise capital gains tax on Bitcoin and other cryptocurrencies to 42%, Deputy Finance Minister Maurizio Leo revealed the news at a press conference on October 16th.
Leo explained that as cryptocurrencies, particularly Bitcoin, grow in popularity, he expects the government to increase the withholding tax rate from the current 26% to 42%.
According to a translation of his statement:
“As this phenomenon (Bitcoin) becomes more widespread, withholding tax is expected to rise from 26% to 42%.”
This proposed tax hike could make Italy one of the countries with the highest taxes on cryptocurrencies in the world.
Meanwhile, the new tax plan appears to be a departure from Prime Minister Giorgia Meloni’s previous promise that there would be no major tax increases. However, her comments appear to be aimed at avoiding broader tax increases rather than specific changes to niche areas like cryptocurrencies.
She wrote to X:
“As we promised, there will be no new taxes on our people. Additionally, we will make structural tax cuts for workers and $3.5 billion in funding from banks and insurance companies for healthcare and the most vulnerable.” ” to ensure better services closer to everyone’s needs.
It is still unclear whether the new virtual currency tax policy will be effective. Countries like India that have introduced heavy taxes on digital assets have seen trading volumes drop significantly as investors turn to offshore platforms to escape the high tax burden.
Cryptocurrency community reaction
Meanwhile, the announcement sparked a backlash from Italy’s crypto community, with many users considering moving to countries with more favorable tax environments, such as Dubai. Last week, the UAE exempted all crypto transactions from paying value added tax.
Tether CEO Paolo Ardoino expressed his displeasure and shared a meme suggesting an exodus of crypto users from Italy to more welcoming regions.
He later commented that Italy’s logic seems to be that the more successful a sector is, the more it should be taxed.
Ardoino added sarcastically:
“It is common for[Italians]to use Bitcoin as a protection or hedge against Italian monetary policy.”
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