Quadro RW

Quadro RW is a section of the Italian annual tax return (Modello Redditi) used to declare financial assets and investments held abroad. Italian residents must report foreign accounts, investments, and financial instruments — including balances on prediction market platforms.

Who must file Quadro RW

Any Italian tax resident who holds financial assets outside Italy at any point during the tax year must file Quadro RW, regardless of whether any income was earned. This includes:

• Kalshi or Polymarket account balances
• Cryptocurrency wallets (e.g., USDC on Polygon for Polymarket)
• Foreign bank accounts used for deposits/withdrawals

IVAFE tax

Foreign financial accounts reported on Quadro RW are subject to IVAFE (Imposta sul Valore delle Attività Finanziarie Estere) — a wealth tax of 0.2% per year on the value of foreign financial assets. This is charged regardless of whether you earned any gains.

Penalties for non-compliance

Failure to file Quadro RW can result in penalties of 3–15% of the undeclared amount (6–30% for assets in blacklisted countries). The Italian tax authorities are increasingly aggressive about foreign asset reporting.

Similar foreign asset reporting requirements worldwide

Italy is not alone in requiring foreign asset declarations. Prediction market traders in other countries face similar obligations:

• Spain: Modelo 720 for foreign assets exceeding €50,000
• US: FBAR (FinCEN 114) for foreign accounts exceeding $10,000 in aggregate
• Germany: No separate filing, but foreign income must be declared on the tax return
• France: Formulaire 3916 for foreign bank accounts

Italy's Quadro RW is notable for having no minimum threshold — any foreign asset must be reported.

Practical tips for compliance

Italian prediction market traders should:

1. Screenshot your platform balances on January 1 and December 31 (needed for Quadro RW valuation)
2. Track EUR/USD exchange rates on those dates using the Banca d'Italia official rates
3. Remember to include crypto wallet balances if you trade on Polymarket
4. File Quadro RW even if your account balance is zero — if you held assets at any point during the year, reporting is required

Frequently asked questions

Is the 0.2% IVAFE tax in addition to the 26% imposta sostitutiva?

Yes. IVAFE is a wealth tax on the value of foreign financial assets. You pay it regardless of whether you earned any gains. The 26% imposta sostitutiva is a separate tax on actual capital gains. Both apply simultaneously.