Italy recently announced a major change in its tax policy regarding Bitcoin and other cryptocurrencies. The capital gains tax on digital assets will increase from 26% to 42%, sparking widespread discussions in the crypto market.
This substantial hike aims to capitalize on cryptocurrency profits but could also discourage investors and reduce participation in Italy’s growing crypto sector.
Italy’s Crypto Tax Hike: What You Need to Know
On Wednesday, Italy revealed its plan to increase the capital gains tax on cryptocurrencies from 26% to 42%. This move follows a previous policy that imposed a 26% tax on crypto gains above €2,000. The government, led by President Georgia Meloni, hopes to use these tax increases to boost the national economy. However, this higher tax rate may dampen investor interest in digital assets across the European Union.
Interestingly, Italy’s inflation rate was 1.2% in September, lower than many other European countries. Despite this, the new tax plan has caused concern among investors, who are now rethinking their crypto strategies in response to the proposed hike.
Bitcoin Continues to Perform Well Despite Tax Changes
At the time of writing, Bitcoin (BTC) is showing resilience, with its price climbing nearly 3% to $67,546. The cryptocurrency’s 24-hour low and high were recorded at $64,809.20 and $67,881.68, respectively, reflecting strong bullish sentiment in the market.
Institutional interest in Bitcoin also continues to grow, as evidenced by the $371 million inflow into Bitcoin ETFs as of October 15. Additionally, Bitcoin futures open interest increased by 3.5% to $39.14 billion, while derivatives volume surged by 61% to $106.47 billion. These numbers suggest that despite Italy’s tax increase, Bitcoin remains strong in the global market.
Meanwhile, other countries like the UAE are taking a different approach. The UAE’s Federal Tax Authority recently announced VAT exemptions for virtual asset transfers, which could positively impact the broader crypto market.