Italy's Economy Minister Defends Proposal to Increase Crypto Tax to 42%

Economy Minister Giancarlo Giorgetti defended a proposed tax increase on cryptocurrency earnings from 26% to 42% in yesterday’s hearing before the Budget Committees of the Chamber and Senate. Despite Giorgetti’s endorsement, two of the three governing coalition parties, including Giorgetti’s own League, appear to favor reversing the proposal to align Italy with the pro-crypto stance emerging in the United States under Trump’s influence.

Giorgetti Proposes Revisiting Crypto Tax Rates

During the hearing, Giorgetti explained the rationale for raising the tax rate on speculative cryptocurrency profits, aiming to differentiate between long-term, “patient” investments and short-term trading profits. The proposed increase to 42% is intended to favor stable, long-term investments over the high volatility of speculative crypto trading.

However, Giorgetti acknowledged the need to mitigate the tax’s impact on certain types of crypto gains by adjusting the tax based on the investment duration. Specifically, he indicated that long-term investments may qualify for lower tax rates, though he did not specify the required holding period to avoid the high tax rate.

The League Seeks to Align with the New U.S. Administration

The recent U.S. elections brought a shift toward a pro-crypto stance with Trump’s return to the White House, as he advocated for a more tolerant approach toward digital assets during his campaign. His administration is expected to ease regulatory restrictions on crypto, marking a potential change at the U.S. Securities and Exchange Commission (SEC), which had previously adopted stringent policies under the leadership of Gary Gensler.

Trump’s proposed direction positions the U.S. as a potential global hub for cryptocurrencies. Seeking to align with this shift, Italy’s League party, through spokesperson Giulio Centemero, has expressed its geopolitical alignment with Trump, and by extension with Elon Musk, another prominent crypto advocate expected to join the administration. This alignment could pave the way for Italy to adopt a more favorable tax policy on cryptocurrency investments.

Italy’s Strong Saving Tradition

Italy, unlike the U.S., has a strong culture of long-term savings. While rising living costs have impacted this tradition, Italian investors generally prefer steady, long-term savings over speculative trading. The new tax approach reflects this orientation, favoring long-term investors while imposing higher taxes on frequent trading profits.

Giorgetti stated he is open to reviewing and considering amendments that further reinforce this approach, potentially providing tax relief for long-term crypto holders and signaling Italy’s commitment to fostering a stable, responsible crypto investment environment.