Understanding DeFi Yield and Italian Tax Obligations
Decentralized Finance (DeFi) yield—including staking rewards, liquidity mining income, and lending interest—is taxable in Italy. The Agenzia delle Entrate (Italian Revenue Agency) classifies these earnings as “redditi diversi” (miscellaneous income) under Article 67 of the TUIR (Consolidated Income Tax Act). As of 2024, individuals must report all crypto-generated yields regardless of amount, with failure to declare risking penalties of 90-180% of unpaid taxes plus interest. Italy’s flat 26% capital gains tax applies to most DeFi earnings, though professional traders may face higher rates under business income rules.
Step-by-Step Guide to Reporting DeFi Yield
Follow this process for accurate tax filing:
- Track All Transactions: Use tools like Koinly or CoinTracking to log every yield event (date, token amount, EUR value at receipt).
- Convert to EUR: Calculate yield value using the exchange rate from the official Agenzia delle Entrate quarterly bulletin or the daily rate from a recognized exchange.
- Categorize Income: Classify yields as:
- Capital gains (Form RM)
- Other income (Form RT, Box 5)
- Complete Tax Forms: File via Form Redditi PF:
- Section RM for capital gains
- Section RT for miscellaneous income
- Pay Taxes: Submit by June 30th following the tax year via F24 form.
Common Reporting Mistakes to Avoid
- Ignoring Small Yields: All earnings must be reported, even under €1.
- Incorrect EUR Conversion: Using arbitrary exchange rates instead of official sources.
- Misclassifying Income: Confusing capital gains with business income.
- Neglecting Reinvested Yields: Taxes apply when yield is received, not when sold.
Essential Tools for Italian DeFi Investors
Simplify compliance with:
- Tax Software: CoinTracking (Agenzia delle Entrate-compatible reports)
- Portfolio Trackers: Blockpit or Accointing
- Official Resources: Agenzia delle Entrate’s “Quadro RW” guidelines for foreign asset reporting
- Exchange Rate Sources: European Central Bank historical data
DeFi Tax Reporting FAQ
Q: Is unstaking considered a taxable event?
A: Yes—both reward accrual and unstaking trigger tax events if value changes occur.
Q: What if I yield farm on non-Italian platforms?
A> You must still report earnings and declare foreign holdings in Quadro RW of your tax return.
Q: Can losses offset DeFi taxes?
A: Only capital losses from crypto sales offset gains; yield losses aren’t deductible.
Q: Are stablecoin yields taxed differently?
A: No—all DeFi yields follow the 26% rate regardless of token type.
Q: Do I need receipts for small yields?
A: Yes. Maintain transaction IDs and wallet records for 10+ years.
