#How has Italy changed its crypto tax policy?
Italy has recently made cryptocurrency holdings more expensive for investors. Starting on January 1, 2026, the capital gains tax on digital assets will increase from 26% to 33%. This follows the country’s 2025 Budget Law that also removed the annual tax-free threshold of €2,000, meaning that now every realized gain will incur a tax.
With the previous proposal suggesting a tax rate as high as 42%, the final rate of 33% represents a significant compromise, but it still signals a 27% increase compared to the past.
#What does the timeline look like for these changes?
This tax overhaul unfolds in stages. The removal of the €2,000 annual exemption takes effect in 2025, so Italian cryptocurrency holders will soon face taxation on all realized gains, no matter how small. Come January 1, 2026, the capital gains rate will escalate to 33%.
Additionally, a new optional 18% substitute tax will be available starting January 1, 2025. This allows investors to adjust the tax basis of their crypto assets. Essentially, if you buy Bitcoin for $5,000 and it appreciates to $50,000, you can pay 18% on that unrealized gain, potentially lowering future taxes when you sell at the new 33% rate.
For those earning cryptocurrency through staking, mining, or airdrops, these gains might either be taxed at ordinary income rates as high as 43% or fall under the new flat rate of 33%.
#What are the implications for investors in Italy?
The immediate effect of this tax policy revision means that Italian crypto investors will retain a smaller portion of their profits. For instance, if an investor realizes €10,000 in profit under the previous tax structure, they would owe €2,080 in taxes (26% on the €8,000 after the exemption). Under the new regulations, that same profit triggers a €3,300 tax obligation, representing a 59% increase in the tax owed.
The removal of the €2,000 exemption is particularly impactful for everyday retail investors, as previously, modest traders could avoid tax altogether. Now even small-time trades will incur tax liabilities.
Furthermore, the choice to utilize the optional 18% basis step-up could present a strategic dilemma for long-term investors. If you suspect the 33% tax rate is merely a starting point, electing to reset your cost basis now could provide an advantageous strategy for the future.
Lastly, for the broader European crypto landscape, Italy's adjustments exacerbate the inconsistencies among national tax systems, complicating compliance for those engaged with cryptocurrencies in the EU where regulations like the Markets in Crypto-Assets (MiCA) do not address taxation directly.