Italy’s Heavy Crypto-Asset Taxation: A Barrier to Innovation?

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Stefano Capaccioli, Chartered Accountant and Founder of Coinlex, Comments on Italy’s Crypto Climate

Italy, known for its rich history and culture, is becoming less welcoming to one of the world’s most transformative financial innovations—cryptocurrencies. With a maximum taxation rate of 42% on crypto-assets, Italy’s stance is seen as punitive and restrictive, driving concerns among crypto enthusiasts and industry experts.

Stefano Capaccioli, founder of Coinlex and author of “The Taxation of Digital Assets,” voiced his concerns over the country’s harsh approach. In a recent article, Capaccioli criticized Deputy Minister Leo’s actions, which have, according to him, placed undue pressure on crypto-asset holders and businesses, leading to a stifling of innovation and a discriminatory fiscal policy.

Capaccioli states, “Italy is a country that is determined to drive away crypto-assets through judicial actions, administrative burdens, and aggressive taxation. While countries like Germany, Portugal, and Slovenia are attracting major crypto players with favorable policies, Italy remains locked in a stance that criminalizes the sector.”

A Missed Opportunity for Growth

The global crypto market continues to expand, with over a million Italians under 40 holding crypto wallets as of March 2024, according to Capaccioli. Meanwhile, other European nations are seizing opportunities in this evolving industry. Countries such as France and Germany are successfully attracting significant crypto players by creating a conducive environment for digital asset innovation.

However, Italy remains on a different path. Capaccioli explains that Italy’s policies have created confusion among the public and have driven users toward unregulated and potentially fraudulent platforms. “By sanctioning, taxing, and penalizing the use of crypto-assets, Italy is pushing away innovation, while leaving the door open for bad actors,” he warns.

Administrative Challenges and Taxation Inequities

Beyond high taxation, Capaccioli highlights other issues with Italy’s crypto framework:

  • Inconsistencies in capital gains taxation, with no carryforward allowed for capital losses from crypto-assets.
  • Crypto-asset holders are subject to taxation merely for holding assets, adding an extra burden compared to traditional investments.
  • Monitoring and compliance requirements create additional challenges for both individuals and businesses operating in the sector.

These policies, according to Capaccioli, stand in stark contrast to those of other European nations that are positioning themselves as hubs for digital asset innovation. “While the European Union, through regulations like MiCA, aims to create a harmonized framework for crypto-assets, Italy continues to implement measures that deter its growth,” Capaccioli concludes.

A Call for Change

With the impending implementation of the EU’s MiCA regulation, Capaccioli hopes that Italy will reconsider its approach before missing out on the opportunities provided by the burgeoning crypto economy. As global markets become more favorable toward digital assets, Italy risks falling behind in the race for innovation and investment in this sector.

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