Italy raises crypto capital gains tax to 33% effective January 1, 2026

Italy just made holding crypto a more expensive hobby. The country’s 2025 Budget Law bumps the capital gains tax on digital assets from 26% to 33%, effective January 1, 2026. And for good measure, lawmakers also axed the annual €2,000 tax-free threshold, meaning every euro of realized gain will now be subject to taxation.

Here’s the thing: 33% might actually be the compromise. Early proposals floated a rate as high as 42%, which would have placed crypto gains in roughly the same neighborhood as Italy’s top marginal income tax bracket. The final number landed at 33% after negotiations, a figure that still represents a 27% increase over the previous rate.

What changed and when it kicks in

The tax overhaul operates on a staggered timeline. The removal of the €2,000 annual exemption begins in 2025, meaning Italian crypto holders will start feeling the squeeze before the headline rate even changes. Starting next year, all realized gains from crypto assets become fully taxable regardless of size.

Then on January 1, 2026, the substitute tax rate itself jumps from 26% to 33%.

The law also introduces an optional 18% substitute tax that allows holders to step up the tax basis of their crypto holdings from January 1, 2025. In English: if you bought Bitcoin at $5K and it’s now worth $50K, you can pay 18% on the unrealized gain now to reset your cost basis higher, potentially reducing your future tax bill when you eventually sell at the new 33% rate.

For crypto earned through staking, mining, or airdrops, these gains may be taxed at ordinary income rates, which in Italy can climb as high as 43%, or they may fall under the new 33% flat rate.

What this means for investors

The immediate practical impact is straightforward: Italian crypto investors will keep less of their gains. A trader who realized €10,000 in profit under the old regime would have owed €2,080 in taxes (26% on €8,000 after the exemption). Under the new rules, that same gain triggers a €3,300 tax bill. That’s a 59% increase in the actual tax owed.

The elimination of the €2,000 threshold is arguably the more consequential change for everyday retail investors. Previously, small-time traders who made modest gains could avoid the tax entirely. That safety net is gone. A retiree who makes €500 trading crypto on their phone now faces the same tax obligation as a professional trader moving millions.

The optional 18% basis step-up creates an unusual strategic decision for long-term holders. If you believe the 33% rate is the floor and future governments might push it higher, paying 18% now to reset your cost basis could look like a bargain.

For the broader European crypto market, Italy’s decision adds to a growing patchwork of national tax regimes that the EU’s Markets in Crypto-Assets (MiCA) regulation doesn’t directly harmonize. MiCA covers market structure and consumer protection, not taxation, which remains a member-state prerogative.