The Italian government has reportedly scaled back its plans for a significant increase in the capital gains tax on cryptocurrencies, proposing a 28% levy instead of the previously suggested 42%.
The amendment, part of a broader budget plan, reflects a modest rise from the current 26% rate.
According to a Bloomberg report on November 12, Prime Minister Giorgia Meloni’s administration is likely to approve the revised proposal, which comes from the League, a junior partner in the ruling coalition. The plan is still subject to review and approval by lawmakers.
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Italy Minister Defends Tax Hike
Giancarlo Giorgetti, Italy’s Minister of Economy and Finance, defended the earlier, more aggressive tax hike during discussions last month, claiming that there is a “very high level of risk” associated with digital assets, supporting the government’s rationale behind the tax increase.
However, the government now appears to favor a less drastic measure. The decision to reduce the proposed tax rate is unclear, though it coincides with rising optimism in global crypto markets following pro-crypto election victories in the United States.
The original plan to increase the tax to 42% was expected to generate around $18 million annually for the government. However, the revised 28% rate would likely yield significantly less revenue.
JUST IN: 🇮🇹
Italy set to reject 42% tax on #Bitcoin and crypto, and may not increase tax at all – Bloomberg pic.twitter.com/GKcHbUozL2
— Radar🚨 (@RadarHits) November 12, 2024
Critics of the tax, such as Giulio Centemero, a member of Italy’s Chamber of Deputies, have argued that taxing cryptocurrencies at higher rates could be counterproductive, calling for further debate on the issue. For now, the proposal remains under legislative review.
Notably, the proposed increase in capital gain tax on crypto comes as Italy has seen a rise in the adoption of cryptocurrencies. As reported, the number of Italians investing in cryptocurrencies has surged from 8% in 2022 to 18% by early 2024.
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Italy Aligns Crypto Regulations With EU Standards
As part of the European Union, Italy’s crypto industry will soon be governed by the Markets in Crypto-Assets (MiCA) framework, set to take effect in December.
Although MiCA does not impact individual tax policies, it will regulate stablecoin issuers, offer user protections, and address market manipulation in the broader EU, setting a new standard for crypto oversight across Europe.
Earlier this year, the country revealed that it is intensifying its surveillance of the cryptocurrency markets to comply with the MiCA regulatory framework.
These measures aim to strengthen oversight within the digital asset markets. The new decree includes stringent provisions with hefty fines ranging from $5,400 to $5.4 million for offenses such as insider trading, market manipulation, and unlawful disclosure of inside information.
MiCA also provides legal clarity for stakeholders by categorizing digital assets, specifying regulations, and assigning responsibility for enforcement.
The MiCA framework also addresses various challenges by ensuring a level playing field for crypto institutions across the EU and eliminating regulatory fragmentation among member states.
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