As decentralized finance (DeFi) gains traction among Italian investors, understanding how to report DeFi yield earnings to the Agenzia delle Entrate (Revenue Agency) is crucial. This guide breaks down Italy’s tax regulations for crypto staking, liquidity mining, and lending rewards, helping you avoid penalties while maximizing compliance.
- Understanding DeFi Yield Taxation in Italy
- Step-by-Step Reporting Process
- Common Reporting Mistakes to Avoid
- Essential Tools for Italian DeFi Investors
- Frequently Asked Questions
- Is unstaking considered a taxable event?
- How are stablecoin yields taxed?
- What if I yield farm through a VPN?
- Can I deduct gas fees?
Understanding DeFi Yield Taxation in Italy
Italy classifies DeFi earnings as ‘redditi diversi’ (miscellaneous income) under Article 67 of the TUIR (Consolidated Income Tax Act). Unlike capital gains from crypto sales taxed at 26%, DeFi yields face a progressive IRPEF rate ranging from 23% to 43% based on your total annual income. Key taxable activities include:
- Staking rewards from protocols like Lido or Rocket Pool
- Liquidity mining incentives from DEXs such as Uniswap
- Lending interest from platforms like Aave or Compound
- Airdrops and hard forks with monetary value
Taxation triggers upon receipt of tokens, not when converted to fiat.
Step-by-Step Reporting Process
Follow these steps to declare DeFi income correctly:
- Track All Transactions: Use tools like Koinly or CoinTracking to log yield dates, amounts, and EUR values at receipt time
- Convert to EUR: Apply daily exchange rates from the European Central Bank (ECB) for valuation
- Calculate Total Income: Sum all yields received between January 1-December 31
- Complete Tax Forms: Report under ‘Quadro RT – Redditi di lavoro autonomo occasionale’ in Modello Redditi PF
- Pay Taxes: Include yield income in your June/November balance payments or June lump-sum settlement
Maintain records for 5 years including wallet addresses, transaction IDs, and exchange rate proofs.
Common Reporting Mistakes to Avoid
Italian investors frequently encounter these pitfalls:
- Miscalculating EUR values using incorrect exchange rates
- Omitting small-yield transactions (all earnings are taxable)
- Confusing capital gains (26% flat rate) with miscellaneous income (progressive rates)
- Failing to report yield from non-custodial wallets
- Missing June 30 deadline for foreign asset disclosure in RW Form
Essential Tools for Italian DeFi Investors
Simplify compliance with these resources:
- Tax Software: Blockpit or CryptoTaxItaly for automated EUR conversions
- Regulatory Guidance
- Portfolio Trackers: Zerion or Zapper for real-time yield monitoring
- Professional Services: ENASARCO-registered crypto tax advisors
: Agenzia delle Entrate’s Resolution 72/2022 on crypto taxation
Frequently Asked Questions
Is unstaking considered a taxable event?
No. Only the initial receipt of rewards is taxed. Subsequent unstaking or transfers between personal wallets isn’t taxable.
How are stablecoin yields taxed?
Identically to volatile tokens. Convert USDC, DAI, etc., to EUR using ECB rates at receipt date.
What if I yield farm through a VPN?
Italian tax residency determines obligations. Using VPNs doesn’t exempt you if you’re fiscally domiciled in Italy.
Can I deduct gas fees?
Yes. Transaction costs directly related to yield acquisition (e.g., Ethereum network fees) are deductible from taxable income.
Always consult a commercialista (tax professional) specializing in crypto for personalized advice. Proper reporting protects against audits and fines up to 300% of evaded taxes under Italian Law No. 212/2000.
