A blow is coming for the cryptocurrency holders. The Deputy Minister of Economy, Maurice Leo, during the press conference on Maneuver, announced the government's intention to increase taxation on capital gains related to Bitcoin and other cryptocurrencies from 26% to 42%, a move that has raised much controversy and concern in the technology and financial sectors.
The announcement comes in a context of growing interest in the crypto world in Italy: According to research by the Blockchain Observatory of the Polytechnic University of Milan, over 3,6 million Italians currently own cryptocurrencies or tokens. A third of them purchased them through cryptocurrency exchanges, while a significant percentage uses banking apps or traditional trading services to invest indirectly in these assets.
Bitcoin Capital Gains: Increase from 26% to 42%
Leo confirmed that the government plans a increase in taxes on capital gains generated from the sale of Bitcoin. “For capital gains from Bitcoin, we expect an increase in withholding tax from 26% to 42%,” announced the deputy minister of economy. The measure is part of a package of interventions aimed at recovering financial resources to support families, young people and businesses.
This substantial increase in withholding tax will apply to the difference between the purchase and sale price of Bitcoin, and is expected to take effect in 2025. The government's goal is to raise money, but this move has already raised controversy in the financial and technology world.
Maxi-tax on bitcoins, it's already controversial
Deputy Minister Leo's announcement sparked immediate criticism. Ferdinando Ametrano, CEO of fintech Checksig, said that such a measure “would be fiscally discriminatory and probably unconstitutional”. According to Ametrano, an increase in the tax rate could push investors to sell their Bitcoin by the end of 2024, before the new tax comes into force, causing a potential capital flight from Italy.
Furthermore, there is concern about the imbalance which would be created compared to other financial instruments such as Exchange Traded Products (ETPs) or Exchange Traded Commodities (ETCs), which are taxed at 26%.
Another criticism leveled at the tax increase is that it would not generate significant revenue for the State. According to the data, in March 2024 approximately 1,3 million Italians owned Bitcoin for a total value of 2,7 billion euros, with a average of 2.000 euros per investor. Therefore, even if the tax increase were implemented, the additional revenue would be minimal.
Risk of backlash to technological innovation in Italy
And then there is the risk that this tax increase could curb technological innovation, penalising a rapidly expanding sector that is crucial for the future economy. blockchain, the technology on which cryptocurrencies such as Bitcoin are based, is considered one of the most disruptive innovations of recent years, with practical applications in many sectors, from IT to finance. Penalizing this sector could slow down the adoption of technologies, reducing the potential positive impact on the Italian economy.
The increase in taxes on cryptocurrencies, then, contrasts with the promises of the Meloni government not to increase taxes to encourage growth. Previously, the 2024 Budget Law had introduced a 26% tax on capital gains above 2.000 euros, welcomed by the sector. With a rate that could reach 42%, theItaly risks losing its appeal as an innovation hub, driving investors and entrepreneurs away to countries with more favorable tax regimes, thus compromising its competitiveness.
The trend of bitcoin
As the tax debate rages, the market Bitcoin Continues to Show Signs of Recovery. After a long phase of volatility, the price of the cryptocurrency has once again exceeded the psychological threshold of $65.000, rekindling the interest of investors. Currently, Bitcoin is exchanged at around $67.126, consolidating its support in a parallel channel that has limited its movements since March 2024.
