---
title: "Tax regime"
description: "The tax regime — Declarative or Administered — sets how gains from your simulated trades are reported and taxed: whether you file them or an intermediary does."
canonical_url: "https://fincanva.com/glossary/tax-regime"
last_updated: "2026-10-07"
md_url: "https://fincanva.com/glossary/tax-regime.md"
---

# Tax regime

The tax regime is the mode — **Declarative** or **Administered** — that governs how the taxable gains in your simulation are reported and settled. These are Italy's two retail regimes: under Declarative you report your gains yourself in your own tax return, while under Administered an intermediary calculates, withholds and files the tax for you.

**Also seen as:** regime fiscale

In the app the setting is "Tax regime", described as "How taxable events are reported in your jurisdiction."

## How the two regimes compare

The regimes change *who reports and settles* the tax, not the rate on a given gain. The table shows the difference as it works in real life; the next section says what the regime changes inside a [backtest](/glossary/backtest).

| | Declarative | Administered |
|---|---|---|
| Who calculates the tax | You | The intermediary |
| Who files it | You, in your tax return | The intermediary, at source |
| When it settles | At tax-return time | As events occur |
| Your visibility of gross gains | Full (you report each) | Handled for you |

## How does Fincanva handle it?

- The regime is chosen from two options, "Declarative" and "Administered"; the default is Declarative.
- The regime only changes a result under **Italy** [tax residency](/glossary/tax-residency).
- The field is shown only for the **Italy** and **Other** residencies. Under **United States** it is not displayed at all, because the Declarative/Administered distinction is an Italian one. Under **Other** the field is shown, but the simulation applies the same rules as United States — tax settled once a year, on the year's net result — whichever regime you pick.
- For Italian residency the capital-gains rates are set by tax law for the selected regime and shown as "Auto-updated" rather than edited by hand.
- The regime only reaches your results through the [Taxes assumption](/glossary/taxes-toggle). With Taxes off, no regime changes any figure.

## What does the tax regime change in a backtest?

Under **Italy** residency the regime changes three things in the simulation — when the tax is charged, how losses offset gains, and how a partial sale is valued — so two runs that differ only in regime can end with different tax figures even at the same rate.

- **When the tax is charged.** Under **Declarative** the year is settled as a whole: the year's net result is taxed once, when the next year begins. Under **Administered** each gain is taxed as it is realized.
- **How losses offset gains.** Under **Declarative** a loss offsets any non-ETF gain of the same year, whatever order they came in. Under **Administered** a loss only offsets gains realized after it; a gain taxed before the loss happened is not revisited. The window during which a loss stays usable is counted differently too — [capital-gains tax](/glossary/capital-gains-tax#what-happens-to-a-realized-loss) has both rules.
- **How a partial sale is valued.** When a [strategy](/glossary/strategy) sells only part of a position it built up over several purchases, **Declarative** treats the most recently bought shares as sold first, while **Administered** uses the average price of every share held.

## What does it look like in practice?

Two simulations under Italian residency realise the **same 1,000 gain** in March and a **400 loss** in September, and differ only in regime. Under the **Declarative** regime nothing is charged during the year: the year is settled as a whole when the next one begins, the September loss is set against the March gain, and the tax is 26% × 600 = **156**. Under the **Administered** regime the March gain is taxed when it is realized, 26% × 1,000 = **260**, and the September loss cannot reach back to it — it is carried forward, and only reduces gains the strategy realizes later. Same rate, same trades: the regime changed when the tax was paid and how much of the loss had been used by the end of the year.

*This describes what Fincanva models in a simulation, not tax advice for your own situation — see [Is this financial advice?](/docs/not-financial-advice#is-this-financial-advice).*

Fincanva is for education and illustration only. It is not personalised financial advice, and past or simulated results do not predict future ones. [Read the Terms Addendum](https://fincanva.com/terms/addendum#section-3)