Bitcoin Capital Gains Tax Set to Rise to 42% in Italy’s 2025 Budget

In a move that has shaken the crypto community, Italy’s 2025 Budget Law proposes a massive increase in the capital gains tax on Bitcoin and other cryptocurrencies. The law, officially signed by the President of Italy, outlines a raise in the crypto tax from 26% to 42%. This shift, aimed at boosting state revenue, is expected to bring in around €4 billion. As the law awaits parliamentary debate and possible amendments, this tax hike positions Italy among the countries with the highest crypto tax rates globally.

Official Translation of Italy’s New Bitcoin Tax Law

The official text of the proposed law is written under Article 4: Measures regarding the taxation of digital services and crypto activities. Here is the English translation of the relevant section:

1. Amendment to Article 1 of Law No. 145 of December 30, 2018: “Entities liable to the digital services tax are those conducting business activities that generate income from digital services within the territory of the State.”
2. On capital gains and other proceeds referred to in Article 67, Paragraph 1, letter c-sexies of the consolidated text of income taxes, as per Presidential Decree No. 917 of December 22, 1986, starting from the effective date of this law, the substitute tax, referred to in Article 5 of Legislative Decree No. 461 of November 21, 1997, is applied at the rate of 42%.

This sharp increase in the tax rate reflects the government’s need to generate additional revenue, particularly targeting high-income sectors like cryptocurrencies and digital services.

How Italy’s Bitcoin Tax Compares Across Europe

CHART: How bitcoin and crypto are taxed in the EU 🇪🇺

With Italy likely raising rates by 50%, it may be helpful to see which countries offer the best and worst tax rates on cryptocurrencies.

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Italy’s potential new tax rate of 42% will make it one of the most heavily taxed countries in Europe for Bitcoin and crypto gains. For comparison:

• Austria taxes crypto gains at 27.5%.
• France applies a 30% tax on crypto capital gains.
• Germany offers a more flexible approach, with a 0%-45% tax rate based on income.
• Portugal charges 28%, though it exempts gains for assets held for over a year.
• Meanwhile, Malta and Belgium impose a 0% tax for long-term crypto investors, creating a stark contrast to Italy’s proposed rate.

Italy’s decision to raise Bitcoin’s capital gains tax to 42% is a bold move, especially as the crypto market continues to evolve. With Europe’s tax rates varying widely, the country’s stance could lead to shifts in investor behavior, not just in Italy but across the European Union. The final outcome will depend on whether the law passes as is or faces amendments during the parliamentary debate. Crypto enthusiasts and investors alike will be watching closely to see how this impacts Italy’s role in the broader European crypto landscape.