Italy’s 42% Crypto Tax Plan Faces Revision After Pushback

TLDR

• Italy backtracks on plan to raise crypto capital gains tax from 26% to 42% after industry pushback
• Original proposal was part of 2025 budget aiming to generate €16.7 million annually
• League party members Centemero and Freni confirm tax increase will be “significantly reduced”
• Ruling coalition divided over proposal, with Economy Minister Giorgetti supporting higher tax
• Final budget proposal expected by end of December, with possibility of maintaining current 26% rate

The Italian government has pulled back from its controversial plan to raise taxes on cryptocurrency gains following strong opposition from industry players and internal political disagreements. The proposal, which aimed to increase the capital gains tax rate from 26% to 42%, faced mounting criticism that forced lawmakers to reconsider their approach.

Treasury Junior Minister Federico Freni and lawmaker Giulio Centemero, both members of the co-governing League party, announced on December 10 that the proposed tax increase would be reduced. The original plan was introduced as part of Italy’s 2025 budget, with the government seeking to boost public finances through increased cryptocurrency taxation.

Economy Minister Giancarlo Giorgetti initially supported the tax hike as a revenue-generating measure. The government projected that the increased rate would bring in approximately €16.7 million annually for public finances. However, this relatively modest sum sparked heated debates within Italy’s ruling coalition about the potential negative impact on the country’s growing digital asset sector.

The League party, known for advocating business-friendly policies, strongly opposed the tax increase. Party representatives argued that such a steep rise in taxation would risk pushing crypto investors and businesses into underground markets, potentially harming both transparency and economic growth in the sector.

In a joint statement, Centemero and Freni emphasized the need to move past “prejudices about cryptocurrencies” and called for balanced regulation that encouragates innovation rather than discourages market participation. Their stance reflects growing awareness within the government about the importance of maintaining a competitive edge in the digital asset space.

Sources close to the government indicated that officials might ultimately decide to maintain the current 26% tax rate. This possibility suggests a growing recognition of the need to balance revenue generation with the health of Italy’s emerging cryptocurrency sector.

The revised budget proposal, including the modified approach to crypto taxation, must be presented to parliament for approval by the end of December. This timeline puts pressure on lawmakers to find common ground on the contentious issue while addressing broader fiscal concerns.

The debate over cryptocurrency taxation has exposed divisions within Italy’s ruling coalition. While some members push for more aggressive taxation to support public finances, others worry about deterring investment and innovation in the digital asset sector.

Industry stakeholders have been vocal in their opposition to the original proposal. Critics argued that a 42% tax rate would make Italy less attractive for crypto businesses and investors compared to other European countries with more favorable tax policies.

The League party’s resistance to the tax increase aligns with its broader economic vision for Italy. Party representatives have consistently argued that punitive taxation could harm the country’s ability to compete in the growing digital economy.

Political insiders suggest that the internal disagreements over the crypto tax proposal reflect larger tensions within the coalition about economic policy and regulation of emerging technologies. The outcome of this debate could set important precedents for how Italy approaches digital asset regulation in the future.

The Treasury Department’s willingness to revise the proposal shows the government’s responsiveness to industry concerns and internal political pressure. This flexibility may help prevent potential negative impacts on Italy’s developing cryptocurrency sector.

Minister Giorgetti’s original support for the tax increase was based on the need to generate additional revenue for public finances. However, the relatively small projected income from the measure led many to question whether the potential economic drawbacks outweighed the benefits.

The current 26% tax rate on crypto gains places Italy in line with several other European nations. Maintaining this rate could help preserve Italy’s competitive position in the European digital asset market.

As of December 11, 2024, government officials continue to work on revising the tax proposal, with the final version expected to reflect a more moderate approach to cryptocurrency taxation. The outcome will be revealed when the complete budget proposal is presented to parliament later this month.