Good News for Bitcoin and Cryptocurrencies from Italy!

The Italian government, led by Prime Minister Giorgia Meloni, is expected to scale back a planned tax hike for cryptocurrency trading following proposals from coalition partners to moderate the increase.

The League, a junior member of Meloni’s coalition, has proposed an amendment that would lower the tax rate on crypto profits to 28% from the initially proposed 42%, according to people familiar with the matter. The current tax rate is 26%.

Crypto industry leaders have expressed concerns over the proposed tax hike, arguing that it would make Italy’s crypto sector uncompetitive within the European Union. The EU is set to implement its comprehensive regulatory framework for digital assets, known as Markets for Crypto Assets (MiCA), by the end of this year, and Italy’s high tax rate could deter local and international investors from operating in the country.

In addition to the League’s amendment, another proposal by Forza Italia, a coalition party formerly founded by Silvio Berlusconi, aims to scrap the tax increase entirely and remove the exemption on earnings of €2,000 ($2,120) or less.

The League’s proposal includes the establishment of a permanent working group that includes digital asset companies and consumer associations to educate investors on crypto. According to insiders, the Meloni government is likely to support the League’s proposal, but adjustments could still be made before a final decision is reached.

When asked about the tax discussions, Finance Minister Giancarlo Giorgetti stated that he was “willing to consider different forms of taxation depending on how long the investment has been in the portfolio,” signaling a potential shift towards a more flexible approach to taxing crypto assets.

Paolo Barelli, Forza Italia’s parliamentary spokesman, questioned the logic behind the first tax increase, saying: “There is a reason for the increase from 26% to 42% that is incomprehensible to anyone, whether a normal citizen or a big investor.” He called on the government to consider alternative approaches.

*This is not investment advice.