Italy to Increase Capital Gains Tax on Bitcoin to 42%

The Italian government plans to increase the capital gains tax on Bitcoin and other cryptocurrencies. According to a local media report, profits from crypto investments would be taxed at 42%, a notable increase from the existing 26%.

Deputy Economy Minister Maurizio Leo revealed the proposed changes during a press conference on October 16. The tax hike is outlined in the country’s budget proposal for 2025 and is pending parliamentary approval.

Boosting Revenue

The initiative is part of the government’s aim to boost revenue. If implemented, the tax hike could affect Italy’s crypto community, particularly those invested in crypto.

While the tax change primarily targets large investors, its overall impact on Italy’s crypto market is unclear. If approved, Italy would be one of the countries with the highest capital gains tax rates on digital assets.

In addition to the Bitcoin tax increase, the government plans to revamp the Digital Services Tax (DST). The DST was introduced in 2019 and currently applies to online companies that make at least €897.4 million ($974.103 million) worldwide and €5.5 million ($5.97 million) in Italy. The new proposal aims to remove these minimum earnings requirements, which would require more digital service companies in Italy to pay this tax.

This move aligns with the Italian government’s strategy to modernize its tax system, ensuring that the digital economy—including cryptocurrencies and tech firms—contributes somewhat to public finances.

Crypto Community Reacts

The announcement has sparked discontent within Italy’s crypto community, with many considering relocating to countries with more favorable tax policies, such as Dubai. Last week, the UAE exempted all crypto transactions from value-added tax (VAT).

Tether CEO Paolo Ardoino expressed dissatisfaction with the tax rule, sharing a meme suggesting a potential exodus of crypto users from Italy to more tax-friendly jurisdictions. He criticized the Italian government’s reasoning, arguing that a sector should not face higher taxes simply because it becomes more successful.