Italy increases Bitcoin capital gains to 42%

Currently, Italy imposes a 26% capital gains tax on cryptocurrency holdings over €2,000, treating profits from crypto trades as "miscellaneous income." The proposed increase to 42% significantly raises the financial burden on traders and investors, affecting activities such as converting crypto assets to euros, trading non-fungible tokens (NFTs), and purchasing goods with cryptocurrencies. Additionally, mining and NFT sales may face income tax rates of up to 43%.

As the EU prepares to roll out its MiCA framework aimed at harmonizing cryptocurrency regulations across member states, Italy’s aggressive tax policies stand in contrast to the more balanced regulatory approach anticipated under MiCA. While the EU’s regulations are expected to focus on transparency and consumer protection, Italy’s punitive tax regime could dissuade entrepreneurs and investors from participating in the country's fintech sector.

According to Tax Foundation Europe, Italy’s proposed increase in the capital gains tax on cryptocurrencies from 26% to 42% is set to make it the highest in Europe, aligning with Denmark’s rate of 42%.

Tax Foundation Europe reports that other European countries, such as Germany and Spain, impose rates between 26.4% and 28%, with France at 34%. Notably, Switzerland has a 0% tax on crypto gains, making it an attractive destination for investors fleeing high-tax environments.