Italy Proposes 42% Capital Gains Tax on Bitcoin

The move would hike the tax rate from 26%.

By: Pedro Solimano • October 16, 2024

Italian crypto investors aren’t too happy after the country’s Deputy Economy Minister Maurizio Leo floated a proposal to increase the capital gains tax on Bitcoin to 42% from 26%. Leo also wants to eliminate the ceiling established for the country’s “web tax” or Digital Services tax.

“Since the phenomenon in cryptocurrencies is spreading, we are going to raise the capital gain tax on Bitcoin to 42%,” said Leo at a news conference this morning.

However, the tax hike hasn’t been confirmed. Italy’s right-wing government has already approved a budget for 2025 of roughly $33 billion, which officials claim will be partly financed by a levy on Italian banks and insurers.

Nevertheless, raising the capital gains tax on Bitcoin, though not for every financial instrument, would place Italy in the upper echelon among nations. Denmark, with 42% in capital gains, has the highest tax rate on the continent, followed by Norway with 38% and Finland with 34%.

Fears are also mounting that the United Kingdom is considering a capital gains tax increase to 39% from 24%, but pundits are quelling those concerns.

That said, cryptocurrency lands in uncertain waters across the European Union when it comes to tax regimes. Portugal used to have zero capital gains tax for crypto, making it an alluring location for investors, but since 2023, it has hiked the rate to 28% for investors selling digital assets after holding them for less than 365 days.

Investors Prepare to Flee

The potential tax hike has caused investors in Italy to start thinking about fleeing the country with their Bitcoin holdings.

“What the hell [have] I just witnessed. Moving tomorrow to another country. Outrageous,” wrote Arenx.eth on X.

Similar comments flowed freely on Crypto Twitter, while some called out the faulty logic behind the proposal.

“The more successful something is, the more it should be taxed!” wrote Paolo Ardoino, CEO of stablecoin issuer Tether. “How dare the subjects use bitcoin as protection / optionality towards Italian financial policies!”