A letter has recently been sent from the Italian Revenue Agency and the Guardia di Finanza, the financial police, to professional online poker players asking for information on their earnings.
The letter has been sent to professional players who have signed contracts with the principal Italian and international poker rooms, and is looking for details of their winnings, sponsorships, and income from image rights and royalties, as well as from all other online games. It has been estimated that the Italian gaming sector earned EUR3bn (USD4.3bn) in 2010.
The tax authorities are particularly concerned that Italian regulations have been respected, not only with regard to the income declared by the players on their tax returns, but also in respect of the present regulations on the transfer of funds from abroad. Forms, to be filled out by the players and presented to their relevant tax office during a pre-fixed appointment, have been sent with the letter.
In January this year, the Revenue Agency had already stated that all of the income from winnings realised on an online website that does not have an establishment in Italy, and which, therefore, does not withhold Italian tax at source, should be declared on a taxpayer’s return. Such income is subject to personal income taxation on the entire amount, without any allowable deduction for expenses incurred.
The Agency had also explained that, if the taxpayer operates his gaming online by way of a non-interest bearing foreign bank account, running the account could be classified as an external financial activity, subject to monitoring. In that case, if the foreign account has a balance of more than EUR10,000, and if movements across the account in any one year also reach over that amount, it would need to be declared as a financial asset that could produce foreign income liable to be subject to Italian taxation.
For the tax years from 2006 to 2009, the information on the forms should therefore indicate, amongst other things, the amount of winnings and earnings that have been retained in foreign accounts and the balance of that account on December 31 each year. The date, place and organiser of each event in which a player took part, together with the respective amounts won and the documentation concerning any tax already paid, need to be shown.
While all transfers made from Italy to the foreign account should be declared, as well as transfers from that account to the taxpayer’s Italian account, the players will need to also indicate the means by which the funds have been repatriated.
The letter has been sent to professional players who have signed contracts with the principal Italian and international poker rooms, and is looking for details of their winnings, sponsorships, and income from image rights and royalties, as well as from all other online games. It has been estimated that the Italian gaming sector earned EUR3bn (USD4.3bn) in 2010.
The tax authorities are particularly concerned that Italian regulations have been respected, not only with regard to the income declared by the players on their tax returns, but also in respect of the present regulations on the transfer of funds from abroad. Forms, to be filled out by the players and presented to their relevant tax office during a pre-fixed appointment, have been sent with the letter.
In January this year, the Revenue Agency had already stated that all of the income from winnings realised on an online website that does not have an establishment in Italy, and which, therefore, does not withhold Italian tax at source, should be declared on a taxpayer’s return. Such income is subject to personal income taxation on the entire amount, without any allowable deduction for expenses incurred.
The Agency had also explained that, if the taxpayer operates his gaming online by way of a non-interest bearing foreign bank account, running the account could be classified as an external financial activity, subject to monitoring. In that case, if the foreign account has a balance of more than EUR10,000, and if movements across the account in any one year also reach over that amount, it would need to be declared as a financial asset that could produce foreign income liable to be subject to Italian taxation.
For the tax years from 2006 to 2009, the information on the forms should therefore indicate, amongst other things, the amount of winnings and earnings that have been retained in foreign accounts and the balance of that account on December 31 each year. The date, place and organiser of each event in which a player took part, together with the respective amounts won and the documentation concerning any tax already paid, need to be shown.
While all transfers made from Italy to the foreign account should be declared, as well as transfers from that account to the taxpayer’s Italian account, the players will need to also indicate the means by which the funds have been repatriated.
