Italy Raises Crypto Capital Gains Tax to 33% From 2026, Ends €2,000 Annual Exemption

Italy's 2025 Budget Law tightens the tax treatment of crypto, lifting the substitute capital gains tax on digital assets to 33% from 26%, effective Jan. 1, 2026. The law also removes the €2,000 annual tax-free threshold, bringing smaller investors into the tax net. The changes roll out in stages. The €2,000 exemption is eliminated starting in 2025, meaning realized crypto gains become taxable regardless of amount. From Jan. 1, 2026, the substitute tax rate itself increases to 33%. The 33% rate follows negotiations after earlier proposals reportedly considered a levy as high as 42%, near Italy's top marginal income tax bracket. Even so, the final rate represents a roughly 27% increase over the prior 26% flat tax. The Budget Law also introduces an optional 18% substitute tax that allows taxpayers to step up the cost basis of their crypto holdings as of Jan. 1, 2025. In practice, holders can pay 18% on unrealized gains to reset their acquisition value higher, potentially reducing future tax due when assets are sold under the 33% regime. Crypto obtained through staking, mining, or airdrops may be taxed at ordinary income rates, which can reach 43% in Italy, or may fall under the new 33% flat rate depending on classification. For investors, the near-term effect is a higher tax burden and the removal of the de minimis cushion for retail traders. Under the old framework, a €10,000 profit would have been taxed on €8,000 after the exemption, resulting in €2,080 due at 26%. Under the new rules, the same €10,000 gain would be fully taxable, producing a €3,300 bill at 33%—about a 59% increase in tax owed. The optional 18% basis step-up creates a planning choice for long-term holders: paying a lower rate now to reset cost basis could prove advantageous if the 33% rate persists or rises in future budgets. At the European level, Italy's move adds to the region's patchwork of national crypto tax regimes. The EU's Markets in Crypto-Assets (MiCA) framework addresses market structure and consumer protection, while taxation remains a member-state matter.