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Italian digital tax – what it is, how it works and when it applies?

The Italian digital tax, also known as web tax, has now been approved, even though it leaves a number of uncertainties that might be relevant for your business.

As anticipated, the Italian budget law of 2017 already provided for an Italian web tax, but postponed its coming into force to 2019. Now the new budget law has amended its contents and below is an outline from my tax colleagues Giovanni Iaselli and Christian Montinari.

Which companies will be impacted by the Italian digital tax?

The web tax will apply to Italian and foreign companies that – standalone or at the group level – realise in a calendar year:

  • a worldwide amount of revenues higher than € 750 millions and
  • revenues from “digital services” (as described below) rendered in Italy € 5.5 millions.

What are the taxable “digital services”?

The following 3 categories of digital services will be taxable:

  1. The provision on a digital interface of advertisements aimed at users of the same digital interface. This scenario occurs when the ads appear on the user’s device and the latter are used within the Italian territory to access a digital interface;
  2. The making available of a multilateral digital interface that enable users to be in contact or interact among others, also to facilitate the direct supply of goods or services. This scenario occurs when either
    • The service implies a multilateral digital interface that facilitates the direct supply of goods and services directly among users, and the user utilizes the device in Italy in order to access the digital interface and concludes a transaction in the same calendar year; or
    • The service is provided through a different digital interface from that mentioned at previous point and the user disposes of an account for the whole or part of the calendar year that allows him to access the digital interface and such account has been opened using a device in the Italian territory; or
  3. The transfer of data collected from users and generated from the utilization of the digital interface. This scenario applies to data generated by the user utilizing a device within the Italian territory to access the digital interface, within the fiscal year or in the previous one, are transferred in such fiscal year.

The actual scope of the entities to which the digital tax is meant to apply relates primarily to advertising services with Google and Facebook as major targets, but the provision is very broad and shall be clarified by means of a decree to be issued by the Ministry of Finance within 4 months from the coming into force of the law.

Taxable basis and rate

The Italian digital tax is levied at 3% and the taxable basis is given by the revenues deriving from the above mentioned digital services. The digital tax would be paid on a quarterly basis, by the end of the month following each quarter.

Entering into force

The digital tax will be applicable within 60 days from the publication on the Official Gazette of the decree of the Ministry of Finance mentioned above.

A number of grey areas shall be clarified in the coming months and you may read this previous article on the topic”Italian web tax – Will it impact your business?“.

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Giulio Coraggio

I am the head of the Italian Technology sector and the global head of the IoT and Gaming and Gambling groups at the world-leading law firm DLA Piper. IoT and artificial intelligence influencer and FinTech and blockchain expert, finding solutions to what's next for our clients' success.

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