So, the sad news finally became reality: the italian government has officially finalized the 2025 Budget Law, setting a new tax rate for digital assets. For all of us (nearly 2 million) holding crypto in Italy, the news is a bitter pill to swallow: capital gains taxes are set to climb to 33% starting in 2026.
While this is a slight "victory" compared to the originally proposed 42% hike, the sentiment among holders remains completely bleak.
For years, Italian crypto taxation was a "gray zone", somehow treated as foreign currency and subject to different interpretations, until the 2023 Budget Law established a 26% rate on capital gains. That stability was short-lived. Under the newly approved measures, in 2025 the rate remained at 26%, but the vital €2,000 exemption threshold has been abolished. Previously, small-time investors making less than €2,000 in profit per year paid nothing. Now, even a €1 profit is taxable. In 2026 the capital gains tax jumps to 33%.
From a holder’s perspective, this is a glaring inconsistency. While traditional financial instruments (stocks, bonds) are generally taxed at 26%, and government bonds (BOTs/BTPs) enjoy a privileged 12.5% rate, crypto is being singled out for a higher burden. It effectively treats Bitcoin and Ethereum not as "digital gold" or innovative tech, but as a "sin tax" category.
To mitigate the backlash, the government introduced an optional 18% substitute tax. Holders can choose to pay 18% on the entire value of their portfolio as of January 1, 2025. The problem with this solution is that you should pay a tax on something highly volatile, with the risk that when you're going to sell the total value could be even less than the taxes you paid in advance.
The silence from politicians and community
Perhaps the most stinging aspect of this hike is the political context. During the campaign and early months of the administration, prominent figures from the government parties positioned themselves as protectors of the middle class and champions of digitalization. High-ranking members initially voiced strong opposition to the "outrageous" 42% proposal, calling it counterproductive and a threat to a growing market, and welcomed the delay of 2025 as a huge success, promising to fight to make the 26% rate structural, avoiding any increase for the future years.
Yet, when the final deal was struck, the "protection" offered was merely a reduction to 33%, a rate that remains 7 points higher than traditional stocks and significantly higher than the European average. The promises to treat crypto fairly vanished in the face of the need to plug holes in the national budget.
Furthermore, the Italian crypto community itself bears some responsibility. For much of the year, while the government was drafting these changes, the collective response was largely quiet. Unlike the organized lobbying seen in the US or even France, the Italian movement lacked a unified voice. This silence likely signaled to Rome that crypto holders are a "safe" target for revenue, a group that will complain on social media but lacks the political coordination to force a real backtrack.
The 0.2% Holding Tax
As if the capital gains hike weren't enough, Italian holders must also navigate the IVAFE (Imposta sul Valore delle Attività Finanziarie all’Estero) or its domestic equivalent. The rate is 0.2% annually on the total market value of your holdings as of December 31st.
This is essentially a wealth tax. Whether you made a profit or are "holding the bag" during a crypto winter, you owe the state 0.2% of your total balance every single year. For a long-term holder, this is a slow drain. Over a decade, you aren't just paying for your gains; you are paying for the "privilege" of self-custody or using an exchange.
Is there a future for this country in crypto?
Italy is already a difficult environment for startups. By imposing one of the highest crypto tax rates in Europe, the government is incentivizing its most tech-savvy citizens to move their tax residency to crypto-friendly neighbors like Portugal, Switzerland, or Slovenia.
The removal of the €2,000 threshold hits Gen Z and millennial investors the hardest. These are individuals using small amounts of capital to learn about decentralized finance (DeFi). Forcing them to file complex tax returns for a €50 profit is a massive barrier to entry.
Italy’s tax bureaucracy is notoriously opaque. With the introduction of the 0.2% wealth tax, the abolition of thresholds, and the jump to 33%, the cost of compliance might soon exceed the actual tax owed for small and mid-sized holders, slowing the process of adoption and the investments in the crypto environment. Our hope is that in the next years the politics starts seeing crypto as an opportunity to grow and attract investors rather than something to punish with higher rates than other financial instruments.
