Depending on the country different regulations will apply. For Italy, The Financial Administration intervened for the first time to regulate the profits deriving from the Forex Trading market in 2010, with the publication of Resolution n. 67 / E.
The document clarifies that profits derived from the buying and selling of currencies in Forex Trading, if they exceed certain thresholds, must be reported in the tax return.
The tax legislation concerning capital gains on the sale of currencies is contained in Article 67 of Presidential Decree No. 917/86.
The reference states:
“The taxation of the capital gains deriving from buying and selling of currencies coming from deposits and current accounts occurs only in the case in which the stock in currency in the deposits and current accounts in total is greater than €. 51,645.69 for at least 7 continuous working days in the tax period in which the capital gain was realized " Article 67, paragraph 1, Presidential Decree No. 917/86.
Capital gains realized in the Forex market are subject to a 26% substitute tax in Italy. This is what is provided for by Legislative Decree 44/14.
The non-compliance with IRPEF of capital gains is confirmed by Circular no. 102 / E / 2011 of the Revenue Agency.
THE 26% RULE:
The 26% withholding tax is applied in Italy generally to financial income. Therefore also to the capital gains deriving from Forex Trading.
What happens if the trader loses from Forex?
As stated, the trader has to determine the value (positive or negative) of his account. The positive value is called Capital gain, while the negative value Capital loss.
The capital gain represents a taxable income for the trader paying taxes in Italy, while the capital loss is a deductible cost from the income.
What does deductible capital loss mean?
Deductible loss means that this value can be deducted from the capital gains realized in the next four tax periods.
With this article, we have tried to cover pretty much all the information that might concern the Italian trader when it comes to paying taxes.
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