Italian Prime Minister Giorgia Meloni’s government is preparing an amendment to lessen impending tax increases on crypto transactions.
The proposed crypto gains levy had originally been set at 42%, but the amendment, introduced by League, one of Meloni’s coalition partners in government, caps it to 28%, Bloomberg reported.
The tax which is at 26% now, even the proposed 28% is a tough spot with industry leaders who say it will impair Italy’s crypto competitiveness in the EU.
Italy Proposed Crypto Trading Tax From 42% To 28%
A further amendment proposed by Forza Italia, another governing coalition party founded by the late Silvio Berlusconi, and reviewed by Bloomberg wants to repeal the tax rise and eliminate an exemption from paying taxes on gains of €2,000 ($2,120) or less.
The crypto sector in Italy has voiced strong opposition to a drastic hike in taxes, arguing that a 42% levy would place the nation at a disadvantage, especially with the EU on the verge of implementing its first unified regulatory framework for digital assets, known as the Markets in Crypto-Assets (MiCA) regulation.
The MiCA framework, set to roll out by year-end, aims to establish consistent crypto regulations across the EU, creating an environment where competitive tax policies could influence crypto firms’ choice of base.
While the League wants to lower many types of taxes in a permanent way, its proposal would also set up a “permanent working group composed of digital-asset firms and consumer associations.”
The new body would be aimed at informing Italian investors on crypto to indicate a less adversarial regulatory stance. Although no official statement has been issued, a source added that Meloni’s government is welcoming the League’s plan as part of an overall strategy to reconcile fiscal targets with economic reforms.
Italy’s Fiscal Plans Ahead
Italy’s new fiscal approach is driven by the need to restore the health of public finances with EU fiscal rules set to return soon, after being temporarily suspended during the COVID crisis. Until now, the government has been open to new taxes that hit both crypto and other sectors but fell short of aiming for corporate windfalls like it did in years prior.
However, analysts had estimated the original plan to hike the crypto tax to 42% would have raised about $18 million per year. But with a more moderate 28% tax rate, this could leave crypto transactions generating less revenue per transaction for the government.
Finance Minister Giancarlo Giorgetti has pointed to possible alternatives to taxing profits on crypto. Recently he spoke to lawmakers and indicated that tax rates could depend on the length of time a digital asset is held for, thus bringing it more in line with capital gains tax treatment for other types of assets.
This latest effort for a more tempered crypto tax approach comes as Italy aims to face more general fiscal challenges and approaches on the global scene continue to shift in relation to such technology.
Meanwhile, political voices inside of Italy’s government claim that high taxes could hinder the domestic crypto sector by disincentivizing both individual and institutional involvement.
As Europe nears its first harmonized regulatory framework for all things crypto, Italy’s ultimate choice on tax rates could showcase how member states balance the desire to benefit from digital asset revenues with healthy industry interests.