Italy Significantly Raises Bitcoin Capital Gains Tax
The Italian Ministry of Economy and Finance announced the "2024 Budget Plan Draft" (DBP) on Wednesday, which includes new tax plans. According to a report by Watcher.Guru, the country plans to raise the capital gains tax on Bitcoin (BTC) from 26% to 42%, aiming to raise funds equivalent to 0.2% of the Gross Domestic Product (GDP) by 2025, approximately 4 billion euros (4.35 billion dollars), which would make it the country with the highest Bitcoin tax rate in the world.
Why is Italy Raising Bitcoin Taxes?
The country's inflation rate fell below 1% in September, putting further pressure on the European Central Bank, which may prompt it to lower interest rates. Meanwhile, the budget draft emphasizes that Italy expects revenues from banks, insurance products, and gaming businesses to decrease by 0.073% of GDP in 2026, and by 0.096% in 2027.
Typically, as inflation slows, the likelihood of interest rate cuts increases, making borrowing easier, and thus investors are more willing to take risks. Italy may anticipate an increase in Bitcoin investments, which is why it chooses to raise the capital gains tax on Bitcoin to boost treasury revenue. However, such a high tax rate may force Bitcoin and cryptocurrency investors in Italy to leave the country or seek other "underground avenues."