Italy has decided to go all in, bumping up the capital gains tax on cryptocurrency from 26% to a staggering 42%. Bloomberg reports this move is part of a plan to fund some rather expensive campaign promises. It is a way to tackle a budget deficit with the help of crypto enthusiasts.
Deputy Finance Minister Maurizio Leo optimistically explained that it is all about how the “Bitcoin phenomenon is spreading.” He supposes that a rise in the cryptocurrency should be accompanied by higher tax rates.
However, history shows that moves like this do not always go as planned. Take India, for example. It tried introducing reasonable taxes on digital assets. In this light, investors flock to offshore accounts instead of funding the national Treasury. However, Italy is undeterred, as its government believes that BTC will withstand all tax measures.
Italy’s economic situation is not very favorable. The country’s national debt hit over 2.8 trillion euros in 2023 and is steadily inching towards the 3 trillion mark. The debt-to-GDP ratio, staying around 140%, has been a headache for Rome for years now.
Thus, crypto investors in Italy may face Bitcoin’s new highs together with increased tax rates.
