All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Italy: Italy implements new web tax on internet companies



Giuliano Foglia

Marco Emma

The Italian Parliament approved new controversial measures, which aim at tackling the base erosion effects of digital commerce. The main measure forces non-Italian companies selling online advertising to get an Italian VAT number to sell their services to Italian-based clients. Such measure was introduced by the 2014 Budget Bill (Legge di Stabilità 2014) and provides that internet advertising services and online sponsored links (including search advertising services) can only be purchased, both directly or indirectly – including through media centers and third party operators – from and through entities (for example, publishers, advertising agencies, search engines or other advertisers) with an Italian VAT code. An earlier version of the Italian measure also applied to all e-commerce activities in Italy. It was then scaled back only to the sale of advertising space.

The measure – dubbed with the popular name Google tax or web tax by the Italian press – is believed to be the first of its kind in Europe: an attempt to combat the issue of big internet and technology companies' corporate taxable profits erosion, since in July OECD, at the request of the G20, proposed a blueprint to fight strategies used by certain internet companies to shift taxable profits into tax havens.

This provision, whose entry into force has been postponed by a subsequent decree to July 1 2014, stirred up broad debate. In fact, it raised several doubts on its capacity to effectively fight the above mentioned taxable profits erosion strategies and, on the other hand, it is widely thought to violate the rules of the EU single market and to go against the EU fundamental freedoms and non-discrimination EU principles.

The Italian 2014 Budget Bill provides two additional tax measures, effective as from January 1, affecting online advertising services and their ancillary transactions.

Firstly, in spite of the general transfer pricing OECD guidelines, companies carrying out online advertising business are no more allowed, for transfer pricing purposes, to use profit indicators based on the costs suffered for their activity. Such restriction would not apply, however, if the taxpayer agrees in advance with the Italian tax authorities under the international standard ruling procedure (advanced pricing agreements) the correct transfer pricing methodology applicable to the transactions carried out with related parties.

Furthermore, as from 2014 payments for online advertising (and ancillary) services must be exclusively carried out by bank or postal transfer or by alternative payment instruments granting to the Italian tax authorities a full traceability of the flows and of the beneficiaries.

Giuliano Foglia ( and Marco Emma (

Tremonti Vitali Romagnoli Piccardi e Associati

Tel: +39 06 3218022 (Rome); +39 02 58313707 (Milan)


more across site & bottom lb ros

More from across our site

Gorka Echevarria talks to reporter Siqalane Taho about how inflation, e-invoicing and technology are affecting the laser printing firm in a post-COVID world.
Tax directors have called on companies to better secure their data as they generate ever-increasing amounts of information due to greater government scrutiny.
Incoming amendments to the treaty could increase costs on non-resident Indian service providers.
Experts say the proposed minimum tax does not align with the OECD’s pillar two regime and risks other countries pulling out.
The Malawian government has targeted US gemstone miner Columbia Gem House, while Amgen has successfully consolidated two separate tax disputes with the Internal Revenue Service.
ITR's latest quarterly PDF is now live, leading on the rise of tax technology.
ITR is delighted to reveal all the shortlisted firms, teams, and practitioners for the 2022 Americas Tax Awards – winners to be announced on September 22
‘Care’ is the operative word as HMRC seeks to clamp down on transfer pricing breaches next year.
Tax directors tell ITR that the CRA’s clampdown on unpaid taxes on insurance premiums is causing uncertainty for businesses as they try to stay compliant.
HMRC has informed tax directors that it will impose automated assessments on online sellers with inaccurate VAT returns, in a bid to fight fraud.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree