The Italian government, led by Prime Minister Giorgia Meloni, is expected to reduce a planned tax increase for cryptocurrency trading following proposals from coalition partners to moderate the hike.
People familiar with the matter have stated that the League, a junior member of Meloni’s coalition, has suggested an amendment that would lower the tax rate on crypto profits from the initially proposed 42% to 28%. The current tax rate stands at 26%.
Leaders in the crypto industry have expressed concerns about the proposed tax increase, arguing that it would make Italy’s crypto sector uncompetitive within the European Union (EU). The EU is set to implement its comprehensive regulatory framework for digital assets, known as Markets for Crypto Assets (MiCA), by the end of this year, and the high tax rate in Italy could discourage local and international investors from operating in the country.
In addition to the League’s amendment, another proposal by Forza Italia, a coalition party founded by Silvio Berlusconi, aims to completely eliminate the tax increase and remove the exemption on earnings of €2,000 ($2,120) or less.
As part of the League’s proposal, a permanent working group would be established, consisting of digital asset companies and consumer associations, to educate investors about cryptocurrencies. Insiders suggest that the Meloni government is likely to support the League’s proposal, although adjustments may still be made before a final decision is reached.
When questioned about the tax discussions, Finance Minister Giancarlo Giorgetti stated that he is open to considering different forms of taxation based on the duration of the investment in the portfolio. This indicates a potential shift towards a more flexible approach to taxing crypto assets.
Paolo Barelli, Forza Italia’s parliamentary spokesman, questioned the rationale behind the initial tax increase, stating, “There is a reason for the increase from 26% to 42% that is incomprehensible to anyone, whether a normal citizen or a big investor.” He urged the government to explore alternative approaches.
*This is not investment advice.