eToro Tax Reporting in Italy: A Comprehensive Guide
Taxation of eToro Investments in Italy: A Guide
If you are an Italian resident investing through eToro, you must handle your own tax reporting because eToro does not act as a withholding agent. The Italian tax authorities require disclosure of foreign assets and taxation of investment income. This article summarizes the key obligations.
Asset Monitoring and IVAFE (Quadro RW)
All financial assets held abroad (e.g., stocks, ETFs, cryptocurrencies on eToro) must be reported in Quadro RW of the tax return (Modello Redditi PF). The IVAFE (Imposta sul Valore delle Attività Finanziarie detenute all'Estero) is an annual wealth tax of 0.2% on the average value of securities. For bank accounts with an average balance exceeding €5,000, a flat tax of €34.20 applies.
Taxation of Dividends (Quadro RM)
Dividends received from eToro are classified as capital income and taxed at 26%. They are reported in Quadro RM (or M in the 730 form). Losses from other categories cannot offset dividend income.
Taxation of Capital Gains (Quadro RT)
Gains from selling stocks, ETFs, or cryptocurrencies (capital gains) are considered 'other income' and reported in Quadro RT (or T in the 730). The tax rate is 26%. Losses (minusvalenze) can be carried forward to offset future gains of the same category, but not against dividends.
Tax Rates for Different Asset Classes
| Asset Class | Tax Rate |
|---|---|
| Stocks, ETFs, Crypto (capital gains) | 26% |
| Dividends | 26% |
| Government bonds (e.g., BTP) | 12.5% |
| IVAFE (wealth tax on securities) | 0.2% per year |
ETFs: Accumulating vs. Distributing
Accumulating ETFs reinvest dividends automatically, so no immediate tax is due – taxation occurs only upon sale. Distributing ETFs pay out dividends, which are taxed immediately at 26%. For long-term investors, accumulating ETFs are more tax-efficient, maximizing the compound effect.
Practical Tips and Deadlines
The tax return for the previous year (e.g., 2025) is filed in 2026. Payment deadlines are typically June/July (balance) and November (advance). eToro provides annual reports, but the responsibility for correct filing lies with the investor. It is strongly recommended to consult a tax professional specialized in international taxation to avoid errors and penalties.
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