The Parliament approved a government proposal to increase the withholding tax on Bitcoin profits from 26% to 33%.
However, in response to mounting pressure from lawmakers and citizens, the government revised its initial plans, opting for a more moderate approach.
Tax Hike Confirmed
The Italian Senate has finalized the tax rate for cryptocurrency capital gains and other income, confirming a 26% tax rate for 2025. Starting in 2026, the rate will increase to 33%.
This change addresses a recent debate over crypto taxation following the inclusion of cryptocurrencies under the revised 26% tax rate, up from an earlier 12.5%.
A previous proposal to raise the crypto capital gains tax to 42% was scrapped.
A new provision in Article 24 now sets a 33% tax rate on crypto gains beginning January 2026.
Additionally, a new budget measure offers taxpayers the option of paying an 18% substitute tax on cryptocurrencies held as of Jan. 1, 2025.
To take advantage of this option, taxpayers must pay the tax by Nov. 30, 2025, without needing to calculate the purchase costs. The tax can also be paid in three annual installments, with interest on deferred payments.
Removing Exemption Threshold
However, there’s an unwelcome change for Italian cryptocurrency holders as Article 25 removes the €2,000 exemption threshold.
When cryptocurrencies were first regulated in Italy at the end of 2022, a €2,000 exemption threshold was introduced for taxation purposes.
This meant that if the total annual capital gains and losses from cryptocurrency sales did not exceed €2,000, they were not required to be declared, and taxes did not apply.
However, this exemption has now been removed to align the crypto tax regime with that of other financial assets.
As a result, individuals will pay the 26% tax even if the total annual gains and losses from crypto transactions amount to just €1.
Investing in Crypto Education
The League, the party the Economy Minister belongs to, proposed an amendment to institute a permanent working group composed of digital asset firms and consumer associations to provide investor education on cryptocurrencies.
The government will likely endorse the League’s proposal, although no definitive decision has been reached, and modifications may be implemented.
Finance Minister Giorgetti has expressed openness to considering various tax rates contingent upon the duration of the investment.
Economy Minister Will Review Crypto Tax
Italy’s Economy Minister, Giancarlo Giorgetti, said he is open to reviewing proposals to increase the tax on cryptocurrency capital gains, following pressure from some lawmakers in his own party.
“I am willing to explore different forms of taxation for those holding investments in their portfolios,” Giorgetti commented.
The tax hike may generate an additional €16.7 million—equal to €$18.0 million—annually, on top of the current €27 million.
To further discourage crypto holdings, the right-wing FdI party introduced an amendment to the tax decree in the Senate.
The proposal would include “cryptocurrency holdings” in the tax calculation to determine eligibility for tax deductions and social benefits.
This approach contradicts the previous year’s Budget Law, which excluded certain financial products like government bonds. However, Giorgetti promised to review this detail as well.
Ruling Party May Block New Law
Lega, one of the ruling parties, is gearing up to block the crypto tax hike.
Lega’s primary aim is to highlight the significance of cryptocurrencies as a potentially “strategic asset for the country.”
The party contested the new proposed law as it would impose a higher tax rate than in the U.S., where the tax on crypto gains depends on holding time.
The tax on short-term gains is 37%, and that on long-term gains is 20%.
Currently, the substitute tax rate on crypto capital gains in Italy is 12.5%, not 26%, contrary to what some Revenue Agency models have suggested.
Conflicting laws and decrees create this discrepancy, fueling regulatory confusion.
Tax advisor Stefano Capaccioli highlighted how the ongoing uncertainty in Italy’s tax framework has forced crypto investors to pay higher taxes than legally required, underscoring the need for clarity in the fiscal regulation of digital assets.
Italy Raises Bitcoin Capital Gains Tax
The Italian government has announced plans to increase tax on capital gains from Bitcoin. According to Deputy Minister of Economy Maurizio Leo, the new budget bill proposes raising the tax rate from 26% to 42%.
This change is part of a broader effort to generate additional revenue for the Italian government. The increased tax on Bitcoin capital gains will take effect in the 2025 tax year.
“Tax on capital gains from Bitcoin will rise from 26% to 42%. We aim to remove the €750 million ceiling and the €5 million threshold in Italy, effectively eliminating these limits,” Leo said.
Bad Consequences for Italy
The 42% substitute tax planned for 2025 would be “fiscally discriminatory and therefore unfair, probably even unconstitutional,” said Federico Ametrano, CEO and co-founder of CheckSig.
“Like all ill-conceived ideas, it would have the damaging effect of causing crypto capital to flee Italy, creating market distortions, and inducing investors to realize capital gains by the end of 2024.”
According to Ametrano, it would create an unreasonable imbalance compared to investments in Bitcoin ETFs, ETCs, and ETPs, which are taxed at 26%.
Finally, the damage to the Italian industry that provides services in the crypto sector would be enormous.
“I hope for a discussion with the Ministry of Economy and Finance aimed at strengthening tax collection without unreasonable inequalities.”
EU Bitcoin Tax
Taxation of Bitcoin and other cryptocurrencies in the European Union varies significantly by country, reflecting diverse regulatory frameworks.
Germany considers Bitcoin a private currency, with gains tax-free if held for over a year. If sold within a year, gains exceeding €600 are taxed at personal income tax rates. Mining income is also taxed as personal income.
In France, cryptocurrencies are considered movable property, and the relative tax has a flat rate of 30%. This includes income tax and social contributions. Taxpayers must declare their digital assets holdings, even if not sold.
Spain classifies cryptocurrencies as financial assets, imposing capital gains taxes that range from 19% to 26% based on profit amounts. Residents must declare holdings over €50,000.
The Netherlands treats digital currencies as assets within a wealth tax system. Overall, wealth calculations include their value. A tax based on a deemed return is applied without imposing a specific capital gains tax for trading.
In Austria, Bitcoin gains are tax-free if held for over a year; otherwise, they face a flat tax rate of 27.5%. Mining has the same legal value of business income.
While the U.K. is no longer part of the EU, it also impacts the context. Bitcoin is considered property subject to capital gains tax with a tax-free allowance of £12,300.
