[NEWS] Italy to raise capital gains tax on Bitcoin from 26% to 42%

It was revealed on the 16th that the Italian government will raise capital gains tax on cryptocurrencies, including Bitcoin (BTC), from the current 26% to 42%.

According to Italian financial news media Il Sole 24 Ore, the increase is part of an effort to raise revenue to support Italian families, businesses and young people.

Currently, Italian taxpayers are required to report crypto holdings and profits on the Redditi Persone Fisiche form.

The proposed tax changes could affect the portfolio management of local traders and investors, as profits from Bitcoin and other cryptocurrencies will be taxed at a higher rate from next year. They may also open accounts overseas to avoid the high tax rate.

Since the introduction of the tax system in 2023, Italy has imposed a 26% tax on all crypto capital gains over 2,000 euros (approximately 324,000 yen). The planned increase to 42% marks a major shift in Italy's approach to cryptocurrency regulation, affecting traders and investors who are accustomed to lower tax rates.

Italy's cryptocurrency efforts include a consortium of companies developing a system based on Polygon (POL), an Ethereum (ETH) scaling network, with support from a research center backed by the Italian Central Bank in 2023.

The effort is focused on developing an institutional DeFi ecosystem focused on security tokens.

In addition to these cryptocurrency tax changes, Italy will be changing its web tax regulations.

Deputy Finance Minister Maurizio Leo said in a press conference on the 16th that the Italian government is part of an effort to secure financial resources while reducing the budget deficit, as promised in the election. He also said that the Meloni cabinet decided on the measures for Bitcoin because "the phenomenon is spreading."

In addition, Deputy Minister Leo stated that the government plans to simplify tax collection for digital services operated in the country by eliminating existing standards such as the 750,000 euro (approximately 124 million yen) limit and the 5 million euro (approximately 830 million yen) revenue limit.

These measures are the exact opposite of Web 3.0 policies in other countries, and may lead to Web 3.0 developers leaving Italy or stagnating activity.

Japan classifies as miscellaneous income at a maximum of 55%

In Japan, capital gains on crypto assets are classified as miscellaneous income, and the maximum tax rate, including resident tax, is 55%, which is higher than Italy after the tax rate change. This is a hindrance to the promotion and development of the Web 3.0 field in Japan, and is the main reason for the outflow of talented Web 3.0 talent overseas.

For this reason, there are currently requests, mainly from self-regulatory organizations, to include crypto assets in the 20% separate reporting tax, just like FX and stock trading.

Reference: ilsole24ore
Image: Shutterstock

Related articles

UAE tax reform to partially exempt cryptocurrency transactions

New Economy Association proposes tax reform for cryptocurrency