Italy Plans to Increase Bitcoin Income Tax to 42%

The 26% crypto tax on profits over €2,000 has been approved by the Italian Parliament and will be applied from the beginning of 2023, and the figure may increase to 42%.

In a press conference on the draft 2025 budget, which includes the intended methods to raise new revenue, Italian Deputy Minister of Economy Maurizio Leo plans to increase the capital gains tax on digital assets such as Bitcoin from 26% to 42%.

"For capital gains from Bitcoin, we plan to increase the tax from 26% to 42%," said Deputy Minister of Economy Maurizio Leo.

Capital gains are profits earned from selling crypto assets for more than the initial investment.

The 26% crypto tax on profits over €2,000 has been approved by the Italian Parliament and will be applied from the beginning of 2023.

The Italian government's plan to increase crypto income tax comes alongside plans to collect 0.2% of gross domestic product (GDP) of about $4.35 billion by 2025. The country plans to raise money from new tax rules that apply to banks, insurance products and gaming licenses.

The decision to increase the income tax on Bitcoin to 42% shows that Italy expects investment in this cryptocurrency to increase sharply in the coming time, due to the possibility of further interest rate cuts from the FED to move towards the inflation target of 2% in the short term. Usually, interest rate cuts lead to investors being willing to take on more risk when borrowing becomes easier.

However, high taxes could scare investors in Italy away from Bitcoin and related digital assets, potentially curbing crypto growth and making investors more cautious.

With a 42% capital gains tax on BTC, Italy is currently among the countries with the highest crypto tax rates in the world. Other countries that have/are/are preparing to impose crypto capital gains taxes include Brazil and Thailand (both 15%), South Korea (20%), India (30%), and Japan (expected to be 15-55%).