Italy’s New Crypto Tax Hike

The Italian government has unveiled plans to significantly raise the tax rate on capital gains from Bitcoin and other cryptocurrencies, increasing the rate from 26% to 42%. This proposed change, representing a 62% increase, was revealed by Deputy Minister of Economy Maurizio Leo during a press conference on the 2025 budget. The measure is part of a larger effort to generate revenue to support families, young people, and businesses across Italy.

This new tax rate on cryptocurrency capital gains is expected to have a substantial impact on Italian crypto traders and investors. As cryptocurrencies continue to gain traction. The government’s move signals a significant shift in how Italy plans to regulate and tax the rapidly evolving crypto market.

Crypto Taxation in Italy: From 26% to 42%

Italy has taxed cryptocurrency capital gains exceeding €2,000 (about $2,175) since the 2023 tax year at a rate of 26%. However, with the new proposal, capital gains from cryptocurrency sales or other related profits, such as staking rewards, will be taxed at a much higher rate of 42%. This substantial hike will affect the reporting requirements for crypto holders, who must declare their assets on the Redditi Persone Fisiche form and in the section dedicated to foreign financial activities on the 730 form.

The government is seeking to generate additional revenue from the cryptocurrency market, which has been growing steadily in recent years. The new tax proposal is seen as a way to ensure that this expanding market contributes more to the country’s fiscal budget.

A Broader Shift in Italy’s Tax Policies

This increase in the crypto tax rate is part of a broader shift in Italy’s tax policies. Deputy Minister Leo also announced plans to adjust the web tax, removing current thresholds such as the €750,000 ($815,000) cap and the €5 million ($5.43 million) limit on revenue generated in Italy. By removing these thresholds, the government aims to simplify tax collection from digital services operating in the country, ensuring that companies benefiting from Italy’s digital economy contribute their fair share.

These changes in tax policy come on the heels of similar initiatives seen in other countries. For instance, the United Kingdom recently introduced new rules for cryptocurrency taxation, requiring that crypto-related income be identified separately on self-assessment (SA) forms. This trend signals that European governments are increasingly focusing on regulating and taxing the growing crypto market.

Institutional DeFi: Italy’s Push for Blockchain Innovation

While Italy is tightening its grip on crypto taxation, the country has also been actively supporting blockchain innovation. In 2023, a consortium of companies received backing from Italy’s central bank to develop a system based on the Ethereum scaling network Polygon. The initiative, known as Institutional DeFi for Security Tokens, is aimed at creating a secure and efficient blockchain ecosystem for financial markets.

This dual approach—encouraging blockchain development while increasing taxes on cryptocurrency gains—reflects Italy’s balanced strategy of fostering innovation while ensuring robust regulation and revenue generation.

Impact on Crypto Traders and Investors

For Italian cryptocurrency traders and investors, the proposed tax hike will likely have significant financial implications. The new 42% tax rate will apply to all crypto capital gains exceeding €2,000, which could deter some from engaging in high-volume trading. It will also create additional compliance burdens, as investors will need to carefully track and declare their crypto holdings under the new tax framework.

The proposed tax increase is likely to generate mixed reactions from Italy’s crypto community. On one hand, it could lead to a reduction in crypto trading activity as investors weigh the costs of the higher tax rate. On the other hand, the government’s focus on regulatory clarity and revenue generation could strengthen Italy’s position as a leader in the European crypto market.

Conclusion

Italy’s decision to raise the tax on cryptocurrency capital gains from 26% to 42% marks a significant shift in the country’s approach to crypto taxation. As part of broader efforts to generate revenue for public initiatives, this tax increase will have far-reaching consequences for crypto traders and investors. At the same time, Italy remains committed to supporting blockchain innovation through initiatives like its Institutional DeFi for Security Tokens ecosystem. As the global cryptocurrency market continues to evolve, Italy’s new policies are likely to set a precedent for how governments can balance regulation, taxation, and technological advancement.