Italian Finance Minister Defends Proposal To Increase Capital Gains Tax On Crypto To 42%
Italy’s Finance Minister Giancarlo Giorgetti has defended a proposal to hike the capital gains tax on cryptocurrencies like Bitcoin to 42%, countering critics who argue the move could harm the industry.
Speaking at a World Savings Day event on 31 October 2024, Giorgetti emphasized the “very high level of risk” associated with digital assets, supporting the government’s rationale behind the tax increase.
The proposal, approved by Italy’s Council of Ministers, would raise the current 26% withholding tax on cryptocurrency profits to 42%. However, the measure remains subject to parliamentary review before any implementation.
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Bitcoin Tax Rate Proposal Sparks Debate
The proposal has sparked debate among Italian lawmakers, with Giulio Centemero, a member of the Chamber of Deputies, voicing concerns on Oct. 16, calling the tax hike “counterproductive” and advocating for further discussion.
The government estimates that the increased tax rate could generate around $18 million annually.
Earlier in 2023, Italy raised the capital gains tax on cryptocurrency trades over 2,000 euros to 26%, signaling a stricter approach to crypto regulation within the country.
Italy’s decision came against a backdrop of relatively low inflation compared to other European countries. As of September 2024, Italy’s inflation rate was 1.2%, providing some economic stability amid broader fiscal challenges.
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.
Its objectives include safeguarding investors and combating fraudulent activities. Enforcing compliance with anti-money laundering (AML) and financial regulations also fall under MiCA.
The financial industry will closely monitor the implementation of these guidelines as they mark a significant move toward a more regulated and secure utilization of digital assets in the region.
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