Italy’s new crypto tax proposal: What’s at stake
How a 2% tax hike could impact the country's economy and how it compares across Europe
The Italian government is considering an increase in the capital gains tax on cryptocurrencies to 28%.
According to a Bloomberg report released on Tuesday, Prime Minister Giorgia Meloni's government is set to approve a proposed 28% tax on cryptocurrency gains.
This is a shift from an earlier plan to raise the tax rate to 42%, reducing the increase to 2% instead of 28%.
A little less than two years ago, the Italian government raised the capital gains tax on cryptocurrencies above 2,000 euros to 26% as part of a budget plan.
The proposed tax increase could have various implications for the Italy's economy.
From a domestic economic perspective, the measure might discourage investment and cryptocurrency trading in Italy. A higher tax burden could reduce the appeal of these assets, impacting liquidity and lowering activity on local exchanges.
In terms of innovation and sector development, the tax increase could negatively affect the growth of startups and blockchain projects in Italy.
On the other hand, while the Italian government projects higher tax revenues from this measure, the increase could be less effective if investors seek alternatives in more favorable markets within the European Union.
How European countries have taxed crypto
The tax situation on cryptocurrencies varies significantly across European Union countries, reflecting unique approaches in each nation regardless of the broader framework of the European bloc.
In Spain, capital gains from cryptocurrency sales are taxed at progressive rates between 19% and 26%, depending on the size of the gain. This tax is triggered when cryptocurrencies are either converted to fiat currency or used to purchase goods and services.
Notably, taxpayers with crypto assets above a certain threshold must report them in Spain's Wealth Tax.
France imposes a flat tax rate of 30% on cryptocurrency capital gains, which includes social contributions. This tax applies to individuals selling cryptocurrencies, while professional traders are subject to a corporate tax regime, which can be higher.
However, there are exemptions for personal-use cryptocurrency transactions and certain crypto-to-crypto exchanges.
In the Netherlands, cryptocurrencies are classified as taxable assets under the Wealth Tax, with rates ranging from 0.56% to 1.76%, depending on the total value of assets, including crypto. Capital gains on cryptocurrencies are not taxed individually, which makes the Dutch tax system favorable for cryptocurrency investors.
Portugal stands out as one of the most attractive destinations for cryptocurrency enthusiasts, as individual gains from cryptocurrency trading are not taxed.
However, since 2023, the country has implemented taxes on professional trading activities and applies rates to mining and certain cryptocurrency-based businesses.
