In a shocking budget proposal, the Italian government is set to raise the capital gains tax on Bitcoin from 26% to 42%, creating major concerns for crypto investors as the country seeks new revenue sources.

Bitcoin Capital Gains Tax Hike in Italy

A report by Deputy Economy Minister Maurizio Leo states that the Italian government is contemplating raising the capital gains tax on Bitcoin investments from 26% to 42%.

Leo addressed the newly adopted Italian budget measure at a press conference held at Palazzo Chigi on October 16.

Proposed 42% Bitcoin Capital Gains Tax

According to the minister, the proposed budget increases the withholding tax on Bitcoin capital gains to 42%.

Leo further stated that the law would eliminate the minimum revenue requirement for Italy's 2019 budget-introduced "web tax," commonly known as the Digital Services Tax (DST).

Businesses with a yearly revenue of 750 million euros ($817 million) or more, or 5.5 million euros ($5.9 million) from digital service operations in Italy, are now subject to the DST.

Minister Leo on Web Tax and Bitcoin Gains

“On capital gains from Bitcoin, the withholding tax increases from 26% to 42%. On web tax revenues we are working to eliminate the ceiling of 750 million euros and 5 million in Italy, therefore we are eliminating the thresholds.”

A tax on Italian financial institutions would contribute to the proposed 30 billion euro ($33 billion) budget for 2025, which was approved by the Italian government at the same time as the announcement.

Parliament's Approval Pending

The Italian parliament has reportedly not yet given its approval to the proposed budget measures. By year's end, we should have a final tally.

Italian Prime Minister Giorgia Meloni said on October 15 that the country is planning to solicit 3.5 billion euros from financial institutions and insurance firms in order to bolster social services and assist the most disadvantaged residents.

No New Taxes for Citizens, Says Meloni

In an Oct. 15 post on X, Meloni said, "As we promised, there will be no new taxes for citizens." He also said that the money raised would go to "healthcare and the most vulnerable to ensure better services."

Cointelegraph recently revealed that as part of its approved budget for 2023, the Italian Senate raised the capital gains tax on crypto asset transactions over 2,000 euros to 26% in late 2022.