International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

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

Premier League football clubs are accused of avoiding paying up to £470 million in UK tax, while Malta is poised to overhaul its unique corporate tax system.
Bartosz Doroszuk of MDDP offers insights on Poland’s new tax legislation on shifted profits, as the implementation deadline looms nearer.
Four tax specialists preview the UK’s transfer pricing requirements, which come into effect on April 1.
The rise of the QDMTT will likely change how countries compete on tax and transfer pricing policy, but it may not reverse decades of falling corporate tax rates.
ITR’s latest quarterly PDF is going live today, leading on the EU’s BEFIT initiative and wider tax reforms in the bloc.
COVID-19 and an overworked HMRC may have created the ‘perfect storm’ for reduced prosecutions, according to tax professionals.
Participants in the consultation on the UN secretary-general’s report into international tax cooperation are divided – some believe UN-led structures are the way forward, while others want to improve existing ones. Ralph Cunningham reports.
The German government unveils plans to implement pillar two, while EY is reportedly still divided over ‘Project Everest’.
With the M&A market booming, ITR has partnered with correspondents from firms around the globe to provide a guide to the deal structures being employed and tax authorities' responses.
Xing Hu, partner at Hui Ye Law Firm in Shanghai, looks at the implications of the US Uyghur Forced Labor Protection Act for TP comparability analysis of China.