18/10/24

EUROPE: Italian Government Raises Crypto Tax Amid EU Regulatory Changes

As published on: blockonomi.com, Friday 18 October, 2024. 

Italy plans to raise its capital gains tax on bitcoin to 42% amid growing adoption and as the EU prepares to implement its unified cryptocurrency regulations.

Italy is set to increase its capital gains tax on bitcoin from 26% to 42%, according to a recent report by Bloomberg. This decision comes as part of the Italian government’s efforts to fund election promises and reduce the country’s fiscal deficit.

The move coincides with the European Union’s preparation to implement its Markets in Crypto-Assets Regulation (MiCA), which aims to create a unified regulatory framework for cryptocurrencies across the EU.

Deputy Finance Minister Maurizio Leo emphasized the need for the tax increase during a conference call, citing the growing adoption of bitcoin as a key factor.

“The phenomenon is spreading,” Leo stated, highlighting the government’s recognition of cryptocurrency’s increasing prominence in the financial landscape.

Currently, Italy taxes capital gains from cryptocurrencies over €2,000 ($2,171) at 26%, classifying them as “miscellaneous income.”

The existing tax structure also applies to profits from converting crypto assets into euros, trading non-fungible tokens (NFTs) for cryptocurrencies, or using crypto assets to purchase goods or services.

Additionally, income from activities such as mining or NFT sales may incur income tax at rates between 23% and 43%.

The proposed tax hike is part of broader financial measures designed to stabilize Italy’s economy. Prime Minister Giorgia Meloni’s government is looking to balance its budget while fulfilling campaign promises, and the increased taxation on cryptocurrency gains is seen as one way to achieve this goal.

This development in Italy comes at a time when the European Union is preparing to roll out its MiCA framework. The EU-wide regulation aims to establish a comprehensive set of rules for the cryptocurrency market, focusing on transparency and consumer protection.

The implementation of MiCA is expected to create a more uniform regulatory environment across EU member states, potentially influencing how individual countries approach cryptocurrency taxation and regulation.

Despite the announcement of the tax hike, bitcoin’s value has continued to rise. At the time of the report, bitcoin was trading at $67,758, suggesting that investor sentiment remains strong in the face of regulatory pressures.

This resilience may indicate that the cryptocurrency market is maturing and becoming less reactive to individual regulatory changes.

The Italian government’s decision to align its crypto regulations with the EU’s MiCA framework demonstrates a move towards a more coordinated approach to cryptocurrency regulation within Europe.

This alignment could potentially simplify compliance for businesses operating across multiple EU countries and provide more clarity for investors.

Tags

Europe Italy Crypto Tax EU EU Regulation