In Brief (TL;DR)
Find out if earnings from gaming apps need to be declared, and how and when to report them correctly on your tax return.
In this guide, we analyze the tax obligations, distinguishing between occasional earnings and continuous activity that requires a VAT number.
We delve into the different tax regimes and the correct procedures for including this income in your tax return.
The devil is in the details. 👇 Keep reading to discover the critical steps and practical tips to avoid mistakes.
In the digital age, opportunities to earn money online have multiplied. From gaming apps that promise cash rewards to marketplaces for selling used items, more and more people are supplementing their income via their smartphones. This new economic frontier, which combines innovation with the Mediterranean tradition of “the art of getting by,” raises a fundamental question: do the earnings from these activities need to be declared to the tax authorities? The answer is yes, but the methods depend on the nature and amount of the income. Understanding your tax obligations is essential to avoid unpleasant surprises and properly manage your earnings.
This guide provides a clear and comprehensive overview of the tax management of app earnings in the Italian and European context. We will analyze the differences between occasional and continuous activity, the income thresholds not to be exceeded, and the correct procedures to be in compliance with your tax return. The goal is to provide readers of all ages and professions with the tools to navigate the world of digital income safely, turning an earning opportunity into a smooth and transparent experience.
When App Earnings Become Income
Any economic gain, even if small and from an application, can be considered taxable income. For the Italian tax authorities, it makes no difference whether an earning is generated online or offline: what matters is its nature. Income from apps generally falls into the category of miscellaneous income, unless the activity becomes regular and professional. The crucial distinction lies in the frequency and organization with which the proceeds are obtained. A sporadic gain, such as winning an online game or selling an old item, is different from a constant and organized income, which might require opening a VAT number.
The new European directive DAC7 has also introduced greater transparency, obliging digital platform operators to report data on sales and services offered by users to the Revenue Agency. This means that tax authorities have ever-increasing visibility into earnings generated online. The reporting obligation for platforms is triggered when a user exceeds 30 transactions or €2,000 in revenue in a year. It is therefore essential to keep track of every single income to correctly assess your reporting obligations.
Occasional Activity: Limits and Requirements
Many app earnings fall into the category of occasional self-employment. This form of self-employment does not require opening a VAT number, provided it respects certain limits. The activity must be sporadic, not continuous, and lack a professional organization. The main regulatory reference is the income limit: you must not exceed €5,000 net per year, calculated as the sum of all compensation received from various occasional activities. Once this threshold is exceeded, you are required to register with the INPS Separate Management scheme (Gestione Separata) and pay social security contributions on the excess amount.
To declare this income, you must include it in Form 730 (line D5) or the Personal Income Tax Form (Modello Redditi Persone Fisiche). If the payment is issued by an Italian withholding agent (a company or professional with a VAT number), a 20% withholding tax will be applied. This means the amount you receive will already be net of a tax advance. The taxpayer will then have to settle their position during the tax return filing. If, however, the client is a foreign entity or a private individual, the compensation is received gross, and it is up to the recipient to declare the full amount.
Earnings from Games and Prizes
Apps that allow you to earn money by playing are increasingly popular, but how are the winnings taxed? The general rule depends on the location of the game operator. If the platform is licensed in Italy (and operates with an ADM license), the winnings are already taxed at the source as a final tax. The player receives the net amount and is not required to include it in their tax return. The taxation varies depending on the type of game and the amount won.
The situation changes if the prizes come from foreign platforms not authorized in Italy. In this case, the winnings constitute miscellaneous income and must be fully declared in the Personal Income Tax Form (section RL). The entire amount received during the tax period is subject to taxation, without any deduction for the costs incurred to play. It is important to note that playing on illegal platforms can have legal consequences, in addition to tax obligations. Prizes can be in cash, but also in the form of shopping or gas vouchers, which still have an economic value to consider.
Selling Goods and Services
Applications that facilitate the sale of used goods or the provision of small services (like tutoring or consulting) are another widespread source of income. Here too, the determining factor is whether the activity is occasional. The sporadic sale of personal items does not, as a rule, generate taxable income. However, if the activity becomes habitual, with purchases made for the purpose of resale, it is considered a commercial activity. In this scenario, it becomes mandatory to open a VAT number and comply with all resulting tax and social security obligations.
For services rendered, such as private lessons through apps like Preply, the principle of occasional self-employment within the €5,000 annual limit applies. If this threshold is exceeded or if the activity becomes continuous and organized, it transitions to the professional self-employment regime. It is crucial to evaluate not only the amount but also the regularity and intent with which you operate to correctly classify your tax position and avoid penalties.
When a VAT Number is Required
The obligation to open a VAT number arises when the activity of earning through apps loses its occasional character and becomes habitual and continuous. There is no fixed income threshold that determines this transition (the €5,000 is a social security limit, not a tax-related one for opening a VAT number), but it is defined by a combination of factors. If you promote your activity, invest in advertising, or operate in an organized and constant manner, it is very likely that the tax authorities will consider the activity professional.
For example, a developer who creates and sells their own apps on online stores is conducting a commercial activity and must open a VAT number from the start. Similarly, a content creator who earns regularly through platforms like YouTube or Twitch must regularize their tax position. Opening a VAT number involves accounting, tax, and social security compliance, but it also offers access to favorable regimes like the flat-rate scheme, which provides for simplified and reduced taxation for those who meet certain revenue requirements. The choice of the most suitable tax regime depends on many variables, and it is advisable to consult a tax advisor.
How to Declare Your Earnings: A Practical Guide
The declaration of app earnings depends on their classification. If it is income from occasional self-employment, it should be reported in section D of Form 730 or in section RL of the Personal Income Tax Form. It is important to keep all documentation, such as issued receipts and communications from the platforms. If withholding tax has been applied, it should be deducted from the gross tax due.
For winnings from foreign online games, the process is similar: the proceeds must be entered in section RL of the Income Tax Form. Furthermore, if you hold funds in foreign gaming accounts above a certain threshold, you may also need to fill out section RW for the tax monitoring of foreign financial assets. Those operating with a VAT number will follow the rules of their tax regime (standard or flat-rate), declaring revenues according to the prescribed methods. Given the complexity of the matter, especially with foreign-source income or different types of earnings, the support of an accountant can be a wise choice to avoid errors and optimize your tax burden.
Conclusion
Earnings generated through apps represent a tangible opportunity in the modern digital economy, blending tradition and innovation. However, it is a mistake to consider this income as “virtual” or exempt from tax obligations. The fundamental rule is that almost every form of earning must be declared. The correct tax management depends on the nature of the activity: occasional or continuous. For sporadic income, declaring it as “miscellaneous income” is generally sufficient, paying attention to the €5,000 threshold for social security contributions. When the activity becomes habitual and organized, opening a VAT number is an unavoidable step. Being informed and transparent with the tax authorities allows you to seize the opportunities of the digital world with complete peace of mind, turning a hobby or a side hustle into a secure and regular source of income.
Frequently Asked Questions
Yes, generally speaking, any earnings from a gaming app constitute income and must be declared. The method depends on the nature of the earning: if it’s winnings, they fall under ‘miscellaneous income’. If the earning comes from developing and selling apps, it is considered a commercial activity. The obligation to declare exists regardless of the amount, although the methods and taxes may vary.
If the gaming app is authorized by the Customs and Monopolies Agency (ADM), the winnings are paid net of taxes. The platform acts as a ‘withholding agent,’ withholding and paying the taxes directly to the state. In this case, you are not required to include the winnings in your tax return.
If the app is not authorized in Italy, it does not act as a withholding agent. Therefore, you will receive the gross amount of the winnings and will be required to declare it. This income should be entered in the ‘Miscellaneous Income’ section (usually line RL15) of the Personal Income Tax Form. The entire winning amount contributes to your taxable income, without being able to deduct the expenses incurred to play.
Yes, even modest earnings must be declared. However, if the activity is not habitual and continuous, it may fall under ‘occasional self-employment,’ which enjoys simplified tax management up to €5,000 per year. Above this threshold, social security contribution obligations to the INPS Separate Management scheme are triggered. It is important to distinguish between winnings (always to be declared as miscellaneous income) and compensation for an activity (which can be occasional or professional).
Opening a VAT number is mandatory when the activity of earning through apps becomes ‘habitual and continuous.’ This is especially true for those who develop and sell applications or for those who receive regular payments that are not classified as game winnings. For example, selling apps on stores like Google Play or the App Store is considered an e-commerce activity that requires a VAT number, registration with the Chamber of Commerce, and the INPS social security scheme.
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