Italian Deputy Economy Minister Maurizio Leo announced today that Italy is considering raising the capital gains tax on Bitcoin (BTC) and other crypto assets from 26% to 42%.
Italy Weighs Higher Bitcoin Capital Gains Tax
At a news conference on October 16, 2024, Leo stated that the Giorgia Meloni administration is contemplating a significant increase in the withholding tax on crypto-related capital gains, moving it from 26% to 42%.
The proposed 16% hike is part of Italy’s new budget bill, approved by the country’s Council of Ministers on October 15, 2024. The broader goal of the bill is to generate resources for youth, businesses, and families.
It’s worth noting that since the 2023 tax year, capital gains exceeding $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.
Notably, the crypto capital gains tax laws introduced last year marked a significant policy shift from treating digital assets as foreign currency, which attracted lower taxes.
During the press conference, Leo reportedly said that Italy plans to curtail cash usage to tackle money-laundering and tax evasion.
Italy’s stance on digital assets is not particularly unconventional. Since Bitcoin and other cryptocurrencies largely operate in a regulatory gray area – with perceived risks of money laundering and tax evasion – financial watchdogs worldwide have been cautious when crafting policies for digital assets.
In June 2024, the Bank of Italy and the Consob – the Italian market regulator – joined forces to crack down on illicit 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 rise across Europe. Several countries have introduced strict cryptocurrency regulations to curb the misuse of digital assets for illegal activities.
Strict European Regulations Push Exchanges Out
While digital assets promise greater transparency and speed in financial transactions, their potential for unlawful use has raised concerns among European financial watchdogs. As a result, many exchanges have faced regulatory pressure.
One of the victims of Europe’s stringent 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 faced 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 forced out of other European countries, such as the Netherlands and Austria, due to strict regulations around digital assets.
However, despite the regulatory hurdles, businesses are not shying away from embracing cryptocurrencies wherever possible.
For instance, in July 2024, Italian luxury sports car manufacturer Ferrari announced extending its crypto payment options – accepting Bitcoin, Ethereum (ETH), and USDC – to its European dealers. BTC trades at $67,430 at press time, down 0.5% in the past 24 hours.
Featured Image from Unsplash.com, Chart from TradingView.com
