Today, the Deputy Minister of Economy, Maurizio Leo, stated that the government plans an increase in crypto taxes in Italy. The proposal would see the rate on capital gains from sales of Bitcoin and cryptocurrencies rise from 26% to 42%.
The Italian government is discussing the details of the new economic maneuver for 2025, and one of the innovations it is considering is therefore the increase of crypto taxes.
The proposal for the increase of crypto taxes in Italy
This morning, Deputy Minister Leo held a press conference together with the Minister of Economy Giorgetti, during which they outlined the main points of the new economic maneuver.
At a certain point, Leo explicitly stated that they plan to increase the withholding on capital gains from Bitcoin to 42%.
In Italy, the capital gains obtained from the sale of cryptocurrencies are currently taxed at 26%, which is an average percentage compared to that of other European countries.
According to the data from Tax Foundation Europe, the capital gains tax rate in Germany is 26.4%, and in Spain, it is 28%.
The 42% turns out to be the highest European taxation, currently applied only by Denmark.
In France it is 34%, and in Great Britain it is 20%.
In Switzerland, on the other hand, it turns out to be completely null, equal to 0%!
Besides Denmark, there is no European State where it is greater than 40%, so much so that currently the second is Norway with 37.8%, and the third is precisely France with 34%, equal to Finland.
In fact, as of today, excluding Great Britain, 26% is the lowest rate among the major countries of central-western Europe.
The probabilities of success of the proposal
According to the statements of the Italian Deputy Minister of Economy, the probabilities that such a measure will actually be approved by Parliament would seem high.
However, it must be said not only that the government has not yet presented the final text to Parliament, but that it is absolutely possible that the proposal to raise it to 42% will be scaled back.
It could also be just a political strategy to make an increase more palatable, but perhaps of a lower magnitude.
For example, the government might decide to adjust the Italian rate to the 28% Spanish, or more likely to the 34% French.
At this point, it seems unlikely that the increase in the rate on crypto capital gain will be left unchanged.
In this regard, the Italian crypto community is trying to make its voice heard with a petition on Change.org. Unfortunately, it might have little chance of convincing the government to desist from this intention. However, trying doesn’t cost anything!
The disadvantages for Italy of a 42% increase in crypto taxes
Italy is a country where the tax pressure is already quite high, overall.
The percentage of tax revenue in relation to GDP in Italy is 42.6%, according to the OECD, and although it is significantly lower than France’s 47.4%, it is still the sixth highest in the entire EU.
In Switzerland, for example, it is 27.4%, while in Germany it is 41.7%. Even in Greece, it is lower (41.9%).
The current government had also just promised that the economic maneuver for 2025 would not increase taxes, but by now the credibility of Italian politicians is so low that one can no longer even be surprised if one day they announce that taxes will not be increased, and the next day they announce the exact opposite.
The problem is that when a country with already high taxation increases taxes even further, it only encourages emigration to more favorable countries from this point of view, such as Switzerland, which not only directly borders Italy but even has an entire canton where Italian is spoken.
Moreover, measures like this risk driving away especially those with higher assets, effectively impoverishing the country itself.
For example, according to Professor Ferdinando Ametrano, who teaches Bitcoin and blockchain technology at the University of Milano-Bicocca, the substitute tax at 42% planned for 2025 would be “fiscally discriminatory and therefore unfair, probably even unconstitutional”.
Ametrano confirms the hypothesis that it could have the harmful effect of causing crypto capital to flee from Italy, creating market distortions and inducing Italian investors to realize the capital gain by the end of 2024.
On the other hand, the only advantages that can be imagined from such an initiative are those of increasing revenue for the Italian State, something that, moreover, is not even considered a real advantage by several citizens.
The absurdity of ETFs
However, the most absurd thing is that the proposal unveiled by Leo would concern only Bitcoin and cryptocurrencies, and not, for example, exchange-traded products like ETP, ETC, and ETF.
Ametrano himself points this out, revealing that Leo’s proposal would create an unreasonable imbalance compared to investments in ETP, ETC, and ETF on Bitcoin, which would remain taxed at 26%.
Therefore, those who invest or speculate on the price of BTC in Italy using derivative products on the stock exchange would find themselves paying much less tax on capital gains compared to those who do it spot on the exchanges.
In fact, many, like Professor Ametrano, are hoping that the government will agree to a discussion between the Ministry of Economy and Finance and Italian crypto operators, to discuss alternative solutions that can effectively strengthen tax collection without unreasonable disparities.
If, on the other hand, the Leo proposal were to pass, the damage to the Italian industry providing services in the crypto sector could risk being enormous, precisely at a time when innovation in Italy would greatly need to be relaunched.