Italy’s government has made a significant decision to scale back a proposed tax increase on crypto capital gains, following backlash from industry stakeholders and internal divisions within the ruling coalition. Originally introduced as part of the 2025 budget, the proposal sought to raise the tax rate on crypto gains from 26% to 42%, a move aimed at increasing revenue for the government.
Lawmakers Giulio Centemero and Treasury Junior Minister Federico Freni, both representing the co-governing League party, confirmed on Dec. 10 that the increase would be “significantly reduced” during parliamentary discussions. This shift in stance on crypto taxation is a response to concerns raised about the potential negative impact on the digital asset industry.
The revised budget proposal, which includes the softened approach to crypto taxation, is expected to be finalized and presented to parliament for approval by the end of December. Lawmakers are facing pressure to find a balance between fiscal responsibility and creating a supportive environment for the growing crypto sector within Italy.
Critics of the initial tax hike warned that it could drive crypto investors and businesses into the underground economy, leading to a lack of transparency and hindering economic growth. Centemero and Freni emphasized the importance of balanced regulation that encourages innovation and market participation, rather than stifling it with excessive taxes.
There are divisions within the ruling coalition over the proposed tax increase, with Economy Minister Giancarlo Giorgetti originally supporting the measure. However, members of his own party pushed back against it, citing concerns about the impact on Italy’s digital asset sector.
Giorgetti argued that the tax hike could generate approximately €16.7 million annually for public finances, but the League party, known for its pro-business stance, advocated for a more strategic approach. They believe that punishing innovation through excessive taxation could harm Italy’s competitive edge in the global market, urging a reevaluation of the policy.
Overall, the decision to scale back the proposed tax increase on crypto capital gains reflects a growing recognition of the importance of fostering a supportive environment for the digital asset industry in Italy. Balancing the need for revenue generation with the goal of promoting innovation will be crucial as the government finalizes its budget proposal in the coming weeks.