Introduction
In recent years, the world of cryptocurrencies has experienced exponential growth, transforming from a niche phenomenon to a significant sector in the global economic and financial landscape. Even in Italy, interest in this new digital asset is increasing, both among small investors and institutional operators. Cryptocurrencies are no longer just a technological curiosity, but are seen as investment and financial innovation tools that have the potential to redefine how people manage and transfer their money.
In this context, the Italian government found itself faced with the challenge of regulating a rapidly evolving market, which for years was characterized by a certain absence of clear rules. The need for a more robust regulatory framework has emerged in parallel with the growth in the volume of cryptocurrency transactions and their use by an ever-increasing number of people. Among the authorities' main concerns is the attempt to avoid tax evasion and to ensure that investors contribute fairly to state revenues. In this regard, one of the most discussed hypotheses is that of an increase in the tax rate applied to capital gains deriving from operations with cryptocurrencies.
The idea of taxing the gains made by cryptocurrency investors more consistently has found fertile ground at a time when the Meloni government is looking for new sources of revenue to finance a series of economic and social measures. However, this proposal has given rise to a series of criticisms and concerns, not only from those directly involved, but also from sector experts and some economists, who see this potential increase as a brake on the development of a growing market.
The increase in the cryptocurrency capital gains tax rate, if implemented, could represent a significant turning point in the country's tax policies in this sector. To fully understand the implications of this measure, it is necessary to analyze it from various points of view: from that of investors, to that of economic operators and the government itself. This article aims to explore in detail the potential negative impacts that such a decision could have, not only for individual investors, but for the entire cryptocurrency ecosystem in Italy. In particular, the economic consequences, the effect on innovation and start-ups, as well as the possible exodus of capital towards markets with more favorable tax regimes will be examined.
The aim is to provide a comprehensive and in-depth view of the risks associated with excessive taxation in this sector, highlighting how the balance between the need to regulate and tax appropriately and that of promoting an environment conducive to innovation can be difficult to achieve . Cryptocurrencies, in fact, represent not only a new financial frontier, but also a growth opportunity for the economy of the future, and Italy risks losing competitiveness if it is not able to manage their regulation in a farsighted way.
The current regulatory landscape
To understand the impact of a possible increase in the tax rate on cryptocurrency capital gains, it is essential to start from the analysis of the regulatory framework in force in Italy. Currently, the fiscal discipline regarding cryptocurrencies in the country is in a phase of development and consolidation, reflecting the difficulty of regulating a market that is as dynamic as it is complex.
In Italy, cryptocurrencies are not yet recognized as legal tender, but rather as digital assets. This has important implications on their tax treatment, since the capital gains deriving from the trading of cryptocurrencies are assimilated to those generated by other financial assets or speculative activities. Generally speaking, capital gains obtained from the sale of cryptocurrencies are taxed at a rate which currently stands at around 26%. This percentage applies only if the investor has made a net profit from the sale of cryptocurrencies worth more than 2,000 euros. Below this threshold, earnings are considered tax-free, offering some flexibility, especially to small investors.
This approach is based on the need to avoid over-regulation that could discourage the adoption of cryptocurrencies or unfairly penalize small investors, often the most vulnerable to market volatility. The exemption for capital gains below a certain threshold represents, in fact, an attempt to balance the need to tax earnings deriving from cryptocurrencies without making the market excessively onerous for those who participate in it for the purposes of savings or asset protection.
However, despite these efforts, the current system has significant gaps. Firstly, the taxation of cryptocurrencies is still subject to divergent interpretations, both by investors and regulatory bodies. This often translates into excessive complexity in tax returns and a general sense of uncertainty, especially for those who are less experienced in tax matters. In fact, current legislation does not clearly distinguish between the different types of cryptocurrency transactions, such as trading, staking or the use of cryptocurrencies for daily purchases. This lack of clarity causes confusion and can discourage some investors, who fear making mistakes when completing their tax returns.
Secondly, the current tax regime is not always in line with the regulations of other European countries, creating a sort of inhomogeneity that makes Italy less competitive compared to other jurisdictions. There are countries that offer much more favorable tax regimes for those who invest in cryptocurrencies. These approaches have enabled these countries to attract foreign capital and foster the growth of a vibrant and dynamic blockchain ecosystem.
In Italy, however, the situation appears more complex. While the lower capital gains exemption threshold represents an attempt to incentivize investment in the sector, the regulatory framework remains fragmented and unclear. Furthermore, the tax rates currently applied could be considered high compared to those of other countries, especially when compared to jurisdictions that see cryptocurrencies as an opportunity to boost their economy. This causes many investors to prefer to operate from countries with more favorable tax regimes, depriving Italy of capital and potential tax revenue.
The proposed increase in the capital gains tax rate
The hypothesis of an increase in the tax rate applied to capital gains deriving from cryptocurrencies to 42%, compared to the current rate of 26%, is raising a heated debate within the Italian economic and political landscape. The idea was born from the need to align the tax treatment of cryptocurrencies with that of other forms of financial gain, while trying to respond to the growing pressure to increase government revenues. However, this proposal is not without its critical issues and risks having counterproductive effects, especially for a still young and developing market such as that of cryptocurrencies.
Currently, capital gains from the sale of cryptocurrencies are subject to a 26% rate, the same as that applied to other forms of financial income. Any increase in this rate would aim to ensure greater tax fairness, aligning the taxation of cryptocurrencies with that of other financial asset classes such as shares and bonds. The rate increase is also motivated by the idea that cryptocurrencies have generated significant profits for many investors in recent years, and that these profits should be taxed proportionately. This argument, at least on a theoretical level, appears consistent with the general fiscal logic, according to which those who earn more should contribute more to state revenues.
The Meloni government, committed to reducing the public deficit and financing new economic and social policies, sees cryptocurrencies as a potential source of revenue that could help rebalance the accounts. The goal would be to exploit the increase in the value of cryptocurrencies to generate more revenue without having to resort to spending cuts or direct tax increases that could hit already heavily taxed sectors. From a political point of view, therefore, the increase in the tax rate on cryptocurrency capital gains presents itself as a move that could be justified by the need to guarantee greater tax fairness.
However, this perspective does not fully take into account the unique nature of cryptocurrencies compared to other financial assets. Unlike stocks and bonds, cryptocurrencies have extreme volatility that can cause the value of investments to fluctuate dramatically over short periods of time. This aspect makes the issue of taxation particularly delicate, since imposing a high rate on such a volatile market could discourage many investors, both small and large, from entering or remaining active in the sector. Unlike other more consolidated and regulated markets, the cryptocurrency market is in fact based on the trust and attractiveness that it manages to exert, both in terms of potential earnings and favorable tax conditions.
Another crucial aspect that is often overlooked in the tax rate increase debate is the different types of investors participating in the cryptocurrency market. These are not only large financial operators or speculators, but also small savers who see cryptocurrencies as an opportunity to protect their savings from inflation or to diversify their investments. Increasing the tax rate risks disproportionately affecting these small investors, who do not have the resources to manage a higher tax burden or to transfer their capital to countries with more favorable tax regimes. This could generate a domino effect, discouraging not only investments in cryptocurrencies, but also the wider adoption of these technologies as payment or savings tools.
Furthermore, it is important to consider that cryptocurrencies represent, in many cases, a form of technological innovation that goes beyond simple financial investment. The increase in the tax rate could in fact hinder the development of blockchain projects, which are often based on the use of cryptocurrencies as a financing tool. This aspect is particularly relevant for Italy, a country that has shown a growing interest in blockchain technologies and which could benefit from the growth of a local ecosystem based on these innovations. Excessive taxation could stifle this nascent digital economy, reducing Italy's attractiveness as a location for the development of blockchain projects and investments related to these technologies.
A further critical issue concerns the effect that an increase in the tax rate could have on the transparency and tax compliance of cryptocurrency investors. A higher rate could in fact incentivize tax evasion practices or the use of unregulated platforms to avoid declaring earnings. In a sector like that of cryptocurrencies, where decentralization and anonymity play a fundamental role, the risk of evasion is particularly high, and an increase in the rate could paradoxically decrease expected tax revenues, rather than increase them. The result would be a fiscal paradox in which increased taxation leads to a reduction in the tax base, with negative consequences not only for the State, but also for the entire cryptocurrency ecosystem.
The possible increase in the tax rate on capital gains from cryptocurrencies, although motivated by budgetary needs and a principle of fiscal fairness, risks having far-reaching negative effects, particularly affecting small investors, hindering innovation and encouraging practices evasive. This scenario requires more in-depth reflection, which takes into account the specificity of the cryptocurrency market and its growing importance in the global digital economy.
The analysis of the possible consequences for the Italian economic ecosystem.
The introduction of a higher rate on capital gains generated by cryptocurrencies could have significant repercussions on the entire Italian economic ecosystem, and not just on direct investors. In fact, when thinking about the effects of such a tax measure, it is important to adopt a long-term vision that takes into consideration not only the immediate impact, but also the more subtle and complex dynamics that it can trigger.
This reasoning is justified by the application of the Laffer curve to the event of an increase in the rate on capital gains deriving from cryptocurrencies.
The Laffer curve represents an economic concept that describes the relationship between the level of tax rates and the total tax revenue collected by the State: specifically, it explains to what level it is convenient to raise taxes. The central idea is that there is a sweet spot or “zone” at which the tax rate maximizes tax revenue, and that further increases in rates beyond that point can paradoxically reduce total revenue.
The Laffer curve represents, on the horizontal (X) axis, the tax rates, ranging from 0% to 100%, while, on the vertical (Y) axis, the government's tax revenues.
The curve initially rises as taxes rise, but reaches a peak and then begins to fall when rates become too high. It may be difficult to calculate the peak point very precisely but, according to theory, a rate of 26% sees the curve still rising, since the level of taxation is sustainable and investors are not too discouraged. Between 30% and 40%, instead, the maximum point should be found, which sees the curve reverse direction and head downwards, until it reaches zero in the final part (100% rate). This is because high rates discourage economic activity and therefore people invest less or look for ways to avoid paying taxes (evasion, relocation of activities, etc.).
As is logical, an increase in the rate to 42% will be on the descending part of the curve and at this point, the incentives to realize capital gains and declare them to the tax authorities are drastically reduced. Investors may forego selling cryptocurrencies, evade taxes, or move investments overseas, reducing tax revenues.
According to the Laffer curve, therefore, going from 26% to 42% could exceed the optimal taxation point, causing a reduction in tax revenue despite the increase in the rate.
In addition to the consequences just identified, all this would lead to negative effects also in areas that go beyond the national context, meaning by this the perception of Italy as a destination for international investments. Our country, although rich in talent and potential, already has a reputation for bureaucratic complexity and high tax burden, which often discourages foreign investors. The introduction of heavier taxation on cryptocurrencies would risk accentuating this perception, further distancing international capital that could instead contribute to the growth of our technological ecosystem. Countries such as Malta, Switzerland and Portugal, which have adopted more favorable tax policies towards cryptocurrencies, could take advantage of this situation to attract new investors and companies in the blockchain sector, leaving Italy in a marginal position compared to this expanding market.
In particular, Malta has developed a specific regulatory framework for cryptocurrencies, recognizing them as an innovative financial instrument and adopting a reduced taxation policy to encourage investments in the sector. Portugal also, until recently, did not apply any tax on earnings made from cryptocurrencies, making it a favorite destination for crypto investors.
Final thoughts
In conclusion, the possible increase in the tax rate on cryptocurrency capital gains represents a complex challenge for Italy, which finds itself having to balance the need for greater tax revenue with the promotion of innovation and the development of a digital ecosystem . The application of the Laffer curve demonstrates that an excessive increase in taxes could paradoxically reduce overall tax revenues, triggering a disincentive effect for investors. This risk becomes even more relevant in a global market, where many countries compete to attract cryptocurrency-related capital and projects, often offering more favorable tax regimes.
Therefore, before proceeding with a fiscal tightening, it is essential that the Italian government carefully evaluates the dynamics of this sector, considering not only the immediate impacts on tax revenue, but also the long-term consequences for the economy and competitiveness of the country . Balanced and far-sighted regulation could instead allow Italy to become a pole of attraction for technological innovation, supporting the development of the blockchain and cryptocurrency sector without stifling economic growth
More about regulation?
Read more about MiCa regulation pro and cons, here
The impact of MiCA on NFT's, here
UAE, the new frontier, here
*Notes:
There are two reasons that push to set the peak point between 30% and 40%:
- Empirical studies and historical data on financial markets, especially in relation to capital gains taxation, show that maximum tax efficiency can lie in a range of 30-40%. This range is based on various historical cases of changes in tax rates, as seen especially in the United States with the Reagan tax cuts in the 1980s. In particular, regarding capital gains taxation, it was noted that the reduction of the rate from 28% to 20% in 1981 led to a significant increase in revenue, demonstrating that a moderate level of taxation incentivizes the realization of capital gains and therefore higher tax revenue. On the contrary, when the rate was subsequently raised to over 28%, there was a collapse in revenues, confirming that rates above a certain level discourage investors from making profits, reducing overall revenue.
- A rate of between 30% and 40% can be justified as an acceptable "psychological threshold" for many investors, who could tolerate a certain level of taxation without feeling the need to transfer their funds or even implement policies of evasion.
