Maurizio Leo, Italy’s Deputy Economy Minister, declared today that the nation is contemplating an increase in the capital gains tax on Bitcoin (BTC) and other cryptocurrencies from 26% to 42%.
Italy Considers Higher Capital Gains Tax on Bitcoin
During a news conference held on October 16, 2024, Leo mentioned that the Giorgia Meloni administration is evaluating a considerable increase in the withholding tax on capital gains from crypto assets, raising it from 26% to 42%.
This proposed 16% increase is part of Italy’s new budget legislation, which was ratified by the country’s Council of Ministers on October 15, 2024. The overarching aim of the bill is to gather resources for the benefit of young people, businesses, and families.
It’s important to highlight that from the 2023 tax year onward, capital gains exceeding $2,180 have been taxed at a rate of 26%, following the establishment of cryptocurrency-specific regulations designed to simplify the taxation of digital assets.
Moreover, the tax laws regarding crypto capital gains introduced last year represented a major shift in policy, moving away from previously treating digital assets as foreign currency, which had attracted lower tax rates.
At the press conference, Leo reportedly stated that Italy aims to reduce cash usage to confront money laundering and tax evasion.
Italy’s approach to digital assets is not particularly unusual. Given that Bitcoin and other cryptocurrencies generally function within a regulatory gray area, with perceived threats of money laundering and tax evasion, global financial regulators have been cautious in developing policies for these assets.
In June 2024, the Bank of Italy along with the Consob – the country’s market regulator – collaborated to intensify efforts against illicit crypto activities by bolstering anti-money laundering (AML) compliance.
Italy’s regulatory stance reflects that of the European Union (EU), as crypto-related offenses are increasingly on the rise across Europe. Various nations have implemented stringent cryptocurrency regulations to mitigate the misuse of digital assets for criminal activities.
Tightened European Regulations Force Exchanges Out
While digital currencies offer enhanced transparency and speed in financial transactions, their potential for abuse has raised alarms among European financial authorities. Consequently, numerous exchanges have encountered regulatory pressure.
One prominent casualty of Europe’s rigorous crypto regulations is leading digital currency exchange, Binance. In June 2023, the German financial authority denied Binance’s application to provide Bitcoin and other crypto custody services within the country.
Also, during the same month, Binance faced accusations of “aggravated money laundering” in France. It was also accused of providing unauthorized digital asset services to French citizens.
Likewise, Binance was compelled to exit other European nations, such as the Netherlands and Austria, due to strict regulations surrounding digital assets.
Nevertheless, despite the regulatory challenges, businesses are still willing to adopt cryptocurrencies whenever feasible.
For example, in July 2024, renowned Italian luxury sports car manufacturer Ferrari announced the expansion of its crypto payment options – now accepting Bitcoin, Ethereum (ETH), and USDC – through its European dealerships. BTC is currently trading at $67,430, reflecting a 0.5% decrease over the past 24 hours.
Featured Image from Unsplash.com, Chart from TradingView.com
