Tax on Highly Risky Assets
Italian Minister of Economy and Finance Giancarlo Giorgetti has justified the government’s move to increase the capital gains tax from 26% to 42% on cryptocurrencies due to the high risk the assets carry. During the World Savings Day event on October 31, Giancarlo Giorgetti supported the proposal by indicating that high volatility and speculation require higher measures of tax for such virtual assets, especially Bitcoin. His statement underlines the fact that, as such, crypto investments are part of a greater financial stability drive being pursued by the government.
Lawmakers Balk at Proposal
The proposed tax hike has not gone unopposed. In an October 16 post on X, Giulio Centemero, a legislator in Italy’s Chamber of Deputies, mentioned that he was concerned about the plan: “the application of a 42% tax on income produced could be even counterproductive.” Centemero said that it might weigh on innovations in the financial sphere and eventually set a drag on fintech growth in Italy. Comments from the lawmakers express a broader sentiment of over-regulation, an urge to make them balanced and protect investors while not stifling technological development. The proposal will still need to go before the parliament, where debates are expected in the coming weeks.
Projected Revenue from the Tax Increase
If the taxation of digital services makes it all the way to law, the Italian government projects the revenue boost to be around $18 million per year. This projection follows lawmakers’ earlier move to increase the capital gains tax on crypto transactions above 2,000 euros 26% in 2023. The increase to 42% is part of Italy’s general fiscal plan, through which the country hopes to capture at least some of the explosive digital assets market. As such, with higher taxes on crypto gains, the government wants to balance the risks related to such investments along with raising extra funds from the public.
EU’s MiCA Framework to Shape Future Regulations
Even though Italy’s tax policy would stand independently, the planned European Union Markets in Crypto-Assets framework will create a regulatory environment to which all EU members, including Italy, will have to comply starting in December. MiCA will outline rules for the issuing of stablecoins, users’ protection on exchanges, and anti-market-manipulation measures. It would be difficult for MiCA legislation to restrict countries’ tax policies, as it does represent another step toward a coherent regulatory regime within the EU in setting out guidelines for transparency and consumer safety across the crypto market.
