The government of Italian Prime Minister Giorgia Meloni is likely to approve coalition partner’s proposal to soften a mooted tax hike on cryptocurrency tradingaccording to people with knowledge of the matter.
La Liga, a junior partner in Meloni’s coalition, has tabled an amendment to limit the increase to 28%, compared to 42% originally proposed in last month’s budgetaccording to a copy of the proposal seen by Bloomberg News. Currently, the tax is 26%.
Crypto executives had argued that the proposed tax rate was too high and would make the local industry less competitive than in other European Union countries. The EU is preparing to adopt its first regulation on cryptocurrencies, called Cryptoasset Markets, at the end of this year.
Another amendment presented by Forza Italia, another party in the government coalition founded by the late Silvio Berlusconi, and seen by Bloomberg, aims to completely eliminate the tax increase and eliminate an exemption from paying income taxes of 2,000 euros (US$2,120) or less.
As part of the amendment proposed by the League, Italy would establish a permanent working group composed of digital asset companies and consumer associations to educate investors about cryptocurrencies. The government is likely to approve the League’s proposal, although no final decision has been made and could make changes to it, said two of the people, who asked not to be named discussing private information.
A Finance Ministry spokesperson did not respond to specific questions from Bloomberg News, referring instead to statements by Finance Minister Giancarlo Giorgetti, who last week told lawmakers: “I am willing to consider different forms of taxation depending on how long the investment has been in the portfolio.”
Mend public finances
“We believe that such a tax increase is not correct,” said Paolo Barelli, Forza Italia’s whip in the lower house of parliament. “Going from 26% to 42% has a reason that is not understandable to anyone, whether a normal citizen or a large investor.”
Barelli stressed that the amendment was an “invitation” to the Government to explore a series of options “in that direction.” A League representative did not immediately respond to a request for comment.
Italy is working to improve its public finances after the restoration of European Union tax rules. The combination of low growth and rising public debt has forced the Meloni government to make difficult decisions, although it has not moved to taxing corporate windfall profits, as it did last year.
Other countries have imposed taxes on cryptocurrency trading, with little results. India imposed levies in mid-2022 that caused domestic trading volumes to plummet as investors moved to offshore platforms.
Bitcoin, the original cryptocurrency, has skyrocketed since Donald Trump’s resounding election victory last week. Trump’s victory, combined with the success of cryptocurrency-backed candidates in congressional elections, rekindled optimism that the industry will soon benefit from more favorable regulations.
