(Bloomberg) -- Italian Prime Minister Giorgia Meloni’s government is likely to approve a coalition partner’s proposal to water down a mooted tax increase on crypto trades, according to people with knowledge of the matter.
The League, a junior partner in Meloni’s coalition, has put forward an amendment to limit the increase to 28%, compared with the 42% originally proposed in last month’s budget, according to a copy of the proposal seen by Bloomberg News. The levy currently stands at 26%.
Crypto executives had argued that the proposed tax rate was overly steep and would make the local industry less competitive than in other European Union countries. The EU is getting ready to fully adopt its first bloc-wide crypto regulations, called the Markets in Cryptoassets, at the end of this year.
A separate amendment put forward by Forza Italia, another governing coalition party founded by the late Silvio Berlusconi, and seen by Bloomberg, seeks to scrap the tax increase entirely and remove an exemption from paying taxes on gains of €2,000 ($2,120) or less.
As part of the League’s proposed amendment, Italy would establish a permanent working group comprised by digital-asset firms and consumer associations to educate investors about crypto. The government is likely to approve the League proposal, although no final decision has been made and it could make changes to it, two of the people said, asking not to be named discussing private information.
A Finance Ministry spokesperson didn’t answer specific questions from Bloomberg News, referring instead to remarks by Finance Minister Giancarlo Giorgetti, who last week told lawmakers: “I am willing to consider different forms of taxation based on how long the investment has been in the portfolio.”
Mending Public Finances
“We believe that such a tax hike isn’t right,” said Paolo Barelli, the Forza Italia whip in the lower chamber of Parliament. “Going from 26% to 42% has a reason that isn’t widely understandable by anyone, whether that be a normal citizen or a large investor.”
Barelli stressed the amendment was an “invitation” for the government to explore a range of options “in that direction.” A League representative didn’t immediately respond to a request for comment.
Italy is working to improve its public finances after the reinstatement of European Union fiscal rules. A combination of low growth and expanding public debt means Meloni’s government has had to make tough decisions — though it hasn’t moved to tax companies’ extra profits as it did last year.
Other nations have moved to tax crypto trading, with little to show for it. India imposed levies in mid-2022 that caused domestic trading volumes to collapse, as investors moved to offshore platforms.
Bitcoin, the original cryptocurrency, has soared since Donald Trump’s emphatic election victory last week. Trump’s win, combined with the success of crypto-backed candidates in elections for Congress, rekindled optimism that the industry will soon benefit from more favorable regulations.
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