Welcome back dear readers of Invest In The Stock, in today’s article we will cover a particularly important topic for investors and those who trade on eToro, specifically regarding the topic: eToro tax return and how taxes work on eToro, so you will be in compliance with the Italian tax authorities. Let’s begin!
Before delving into this topic, you must know that everything you earn from trading on eToro or on any other online trading platform must be declared on the PF Income Form (instead of the 730 form), which can be completed online or by contacting a accountant, in order to pay the stamp duty on financial assets (IVAFE tax) and the respective taxes on trading in Italy which are due:
- The interests
- eToro capital gains
- The capital losses
- eToro dividends
Among other things, it is possible to reduce the amount of the Italy trading tax by offsetting the value of the capital losses with the future capital gains on the eToro trading account.
Do traders have to pay taxes?
If you carry out online trading activities or if you play on the stock exchange, you cannot forget the trading tax aspects deriving from the use of online financial instruments, therefore, earnings and profits which are obviously taxed and declared to the Revenue Agency.
On the other hand, it is important to know what type of regime to use for taxation on online trading: the administered or declaratory regime, which we will discuss later.
Type of Trading Income
In particular, it is necessary to distinguish the type of income generated by trading operations, which can be two:
- Different income of a financial nature
- Capital income
The first income concerns the profits generated by the buying and selling of financial instruments, that is, capital gains in trading.
Instead, the second refers to financial income, that is, the earnings collected from speculation on the stock exchanges or from trading operations after having invested one’s initial capital, in a nutshell, the profits obtained come both from dividends and from interests or coupons.
Type of scheme: declaration or administrative savings?
As previously mentioned, all financial income from trading activities must be reported in the tax return form every year (RT framework where capital gains of a financial nature must be declared).
It is important to know that when opening an online trading account, you can choose the type of tax regime to adopt, between these two:
- Regime of administered savings
- Declaration system
If the investor decides to manage himself on taxation in trading, he must focus on the declaration regime, and he will have to present his tax return every year through the PF Income Model, in any case he can always go to some professional who will help him better understand how many fees are paid with trading.
On the contrary, this responsibility can be delegated to the broker trading on which you rely or to your bank, through the administered savings regime.
eToro tax return how to do?
The fact that eToro broker is regulated means that:
- It is in compliance with the various tax regimes
- For example, the Common Reporting Standard, which contains all the information flow of financial accounts, acronyms in English CRS
- It is in line with the legal requirements that serve for the Italian tax return
- As it stands to reason, if there are no gains on trading operations, taxes are not paid which, instead, are calculated on the capital gains and reported in the tax return.
As regards capital losses, they too must be declared for fairness and transparency.
eToro account statement
In this way, to make the eToro tax return, you need to download the eToro account statement from the platform, which contains:
- A detailed and comprehensive overview of the activities carried out on eToro
- All movements, transactions, dividends, commissions, deposits and withdrawals
- Your account statement can be accessed from both the eToro webpage and the eToro app.
Read on to understand how to download the eToro account statement which, once downloaded, must be used to fill in the personal income tax form that is presented together with the 730 model at the time of the tax return.
Online trading rate
Therefore, all that remains is to declare trading income, calculating capital gains taxes at a rate of 26%, regardless of whether you have not yet withdrawn money from eToro.
We would like to clarify that the eToro broker, although it is a regulated online broker, does not act as a withholding agent, this means that any tax trading profit is always gross.
It should be noted that taxes on capital losses must not be paid, but as specified in the previous paragraphs, they must be declared anyway, as the Italian tax authorities regularly carry out anti-money laundering checks on the trading accounts under management.
Similarly, if there are open trading positions which, in short, can still generate profit on trading, i.e. all those operations in progress, they must be presented with the eToro account statement during the reporting year.
How to download eToro account statement
To proceed with downloading the account statement on eToro, just follow these simple steps:
- Access the eToro web page, go to the online platform (https://etoro.com/it/) or from the eToro app (available on Android and App Store)
- Go to the Portfolio section, then a screen with a clock-shaped icon will appear showing the history of the activities carried out on eToro
- Click on the Settings section (you need to find the wheel icon that appears in the upper right corner)
- From the drop-down menu, select the Account Statement option
- Select the declaratory year of interest, setting the range of dates you need
- Go to the item that reports earnings in order to calculate eToro online trading fees
For example:
If during the reporting year we recorded eToro trading gains worth 2,000 euros, then the taxes to be paid in Italy must be calculated for tax purposes at a rate of 26%, therefore, the value that corresponds to paying is equal to 520 euros.
Well dear friends of Invest In The Stock, thanks to our guide on how to make the eToro tax return you will avoid nasty surprises with the taxman and any fines, therefore, we advise you to fill in the necessary data (capital gains, losses, interest, commissions, etc. ) very carefully, and if necessary get help from a professional to avoid making a mistake, especially if you are a beginner in this regard.
Invest In The Stock, The Editorial Staff
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