In Italy, the measure that would raise the tax on capital gains generated from sales of Bitcoin and cryptocurrencies to 42% is not liked by many.
Obviously, it is expected that it is not liked by cryptocurrency holders and traders, given that a sudden increase in taxation from 26% to 42% seems at least inappropriate, but it seems that it is not even liked by some politicians, as well as the Italian crypto industry.
The danger of the new tax on Bitcoin capital gains in Italy
The biggest problem is that instead the tax on capital gains generated from sales of crypto derivatives on traditional exchanges would remain at 26%, so in fact the Italian government would be pushing all those who invest or speculate on criptovalute in Italy to abandon crypto exchanges to operate on traditional platforms.
This would endanger the entire Italian crypto industry, including custody and staking services. In other words, all on-chain crypto services provided in Italy would suffer a drastic decline, because individual investors and speculators would no longer find it advantageous to handle tokens, but rather traditional financial derivative products on traditional markets.
There would therefore be the risk of a mass exodus of Italians from on-chain crypto services, including all those that require users to directly use tokens.
The reaction of the crypto sector
The Italian crypto sector reacted very poorly to the news.
It must be said that the new 42% tax has not yet been approved by Parliament, so it is not yet state law, but if nothing changes, approval is expected by the end of the year. Once approved by Parliament and become state law, it would be applied starting from January 1, 2025.
So there are still about two months before the possible final approval, and in theory it is still possible to remove that measure or modify it before it is approved.
Two months may seem like a lot, but in reality, the time frame is very tight. The measure, in fact, is included within the text of the financial maneuver for 2025, and consists of a single paragraph of a single article out of a total of 144 articles and perhaps half a thousand paragraphs.
Many of those clauses are not favored by various forces in Parliament, therefore many amendment requests are expected. The time to discuss and approve an amendment to paragraph 2 of article 4 is actually limited.
Despite all this, the Italian crypto industry has so far managed to react only in a scattered order.
In Italy, in fact, there is no trade association that can represent the entire crypto industry in dealings with the authorities, and there is not even a concrete project underway to create one.
The disorganized reaction of the Italian crypto industry has resulted in the entire process of modification in the regulation being completely in the hands of politics.
The political situation
The text of the maneuver was developed by the Ministry of Economy and Finance (MEF).
The measure of the increase to 42% of the tax on capital gains generated from sales of Bitcoin and cryptocurrencies was publicly announced at a press conference by Deputy Minister Maurizio Leo of Fratelli d’Italia, the main Italian party, currently leading the parliamentary majority supporting the government. It is also the party of Prime Minister Giorgia Meloni.
Some members of Fratelli d’Italia stated that they were completely unaware of the MEF’s intention to include that measure in the text of the budget.
So the main Italian party is actually not entirely in favor of this increase, but it could have much more than one reservation about removing it from the maneuver, thus publicly contradicting the words of its own deputy minister of the economy.
And so, while on one hand the Italian crypto sector is not doing anything concrete to change that regulation, the main Italian party is not doing anything either.
Fratelli d’Italia has about 30% of the seats in Parliament, so it cannot make decisions completely independently. The other two main government forces are the Lega, with about 15% of the seats, and Forza Italia, with about 10%.
The amendment on the increase of the tax on Bitcoin capital gains in Italy
The key point is that the Lega itself, which is the second largest party of the majority, seems instead to be opposed to this increase.
In fact, one of its deputies, Giulio Centemero, has promised to draft the text of an amendment that he will present to Parliament to modify paragraph 2 of article 4 of the current text of the financial maneuver.
Forza Italia has also expressed support, while Fratelli d’Italia has not yet publicly stated a position either in favor or against.
Much will depend on the text of Centemero’s amendment.
The same Lega deputy stated that such an amendment can be presented in different forms, thus implying that there is room for maneuver to make it more acceptable.
In other words, the Lega and Forza Italia will most likely vote for it, but together they barely reach about 25% of the seats in Parliament, an absolutely insufficient percentage to get it approved.
However, if the text were to appeal to Fratelli d’Italia, the chances of its approval would suddenly become substantial, but for this to happen, it will presumably be necessary that the text of the amendment does not end up contradicting the public statements of Deputy Minister Leo.
The other political forces
The three major governing parties together have a large majority in Parliament.
Therefore, all the minority parties combined currently have no power in Italy to pass laws in Parliament without the votes of the majority.
The two main opposition parties are the PD, with 18% of the seats, and the Movimento Cinque Stelle, with 13%.
For now, neither of these two parties has expressed support for or against either the new measure that aims to increase the tax on crypto capital gains, nor Centemero’s amendment, also because the latter has not yet been presented.
The only other parliamentarian who has already spoken is Luigi Marattin from the Mixed Group, who declared that he is in favor of the amendment and even wants to propose one himself in case Centemero’s does not come to a vote.
However, the Gruppo Misto has only 4% of the seats in Parliament, so it cannot significantly change any balance.
The match therefore seems to be playable only between Centemero and Fratelli d’Italia, also because in case of failure it seems very difficult for PD and Cinque Stelle to come to support an amendment presented by their rivals, in support of an industry for which they do not have particular sympathies.