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Italy’s digital services tax still needs practical guidance

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Gian Luca Nieddu and Barbara Scampuddu of Hager & Partners outline the key features of Italy’s digital services tax, and consider the work to be done by tax authorities.

The 2020 budget law has modified Italy’s digital services tax (DST), mirroring the EU Commission proposal of March 2018. The revised version of the Italian DST is now in force effective from January 1 2020.

The new legislation substantially modifies the pre-existing regulation of the tax on digital services introduced with the budget law for 2019, which never entered into force.

DST in a nutshell

The main features of the Italian DST can be summarised as follows:

  • Effective as of January 1 2020;

  • The tax period coincides with the calendar year;

  • It applies to specific types of business-to-consumer (B2C) and business-to-business (B2B) services that imply a high degree of user involvement;

  • It is due by the service provider (Italian or foreign) when certain revenue thresholds are exceeded;

  • 3% tax rate on revenues;

  • The payment of the DST is due by February 16 of the calendar year following the one it refers to and a dedicated DST return will have to be filed by March 31;

  • Revenues from intra-group services are not taxable;

  • Appropriate accounting to collect monthly information on revenues from taxable services;

  • Awaited clarifications from the revenue agency; and

  • It will be repealed following international agreements (the ‘sunset clause’)

Taxable persons

Taxable persons for digital services are those carrying out business activities who, individually or at group level, in the calendar year preceding the relevant one, jointly register:

a) A total amount of revenues (wherever realised) not less than €750 million ($872.3 million); and

b) An amount of revenues deriving from digital services realised in the territory of the state of not less than €5.5 million.

Relevant activities

The DST shall apply to revenues deriving from the provision of the following types of services:

a) Placement on a digital interface of advertising aimed at users of the same interface (online placement of advertising);

b) Making available a multilateral digital interface that allows users to be in contact and interact with each other, also in order to facilitate the direct supply of goods or services (digital platforms that facilitate interactions between users); and the

c) Transmission of data collected from users and generated by the use of a digital interface (sale of collected user data).

Excluded activities

The following services are out of the scope of application of the DST:

a) The direct supply of goods and services, as part of a digital intermediation service;

b) The supply of goods or services ordered through the website of the supplier of those goods and services, when the supplier does not perform intermediary functions;

c) The provision of a digital interface whose exclusive or main purpose is to supply the users of the interface, by the party managing the same interface, with digital content, communication services or payment services;

d) The provision of a digital interface used to manage trading platforms and settlement systems for interbank or financial instruments and other services subject to monitoring by a regulatory authority;

e) The transfer of data by the subjects who provide the services indicated in letter d); and the

f) Organisation and management of telematic platforms for the exchange of electricity, gas, environmental certificates and fuels, as well as the transmission of the relative data collected therein and any other related activity.

DST computation and related provisions

Taxable revenues are assumed gross of costs and net of value added tax and other indirect taxes.

A revenue is considered taxable in a given tax period if the user of a taxable service is located in the territory of the state in that period. Specific rules are provided to identify the concept of ‘user location’.

The tax due is obtained by applying the rate of 3% to the amount of taxable revenues made by the taxable person during the calendar year.

For companies belonging to the same group, a single group entity is appointed to fulfil the obligations deriving from the provisions relating to the tax on digital services.

Non-residents, without a permanent establishment in Italy and without an identification number for VAT purposes, who meet the DST requirements during a calendar year, must apply to the revenue agency for an identification number for digital services tax purposes.

Moreover, non-resident persons, without a permanent establishment in Italy, established in a state other than a member state of the EU or of the European Economic Area, with which Italy has not concluded an administrative cooperation agreement to fight tax evasion and fraud, or a mutual assistance agreement for the recovery of tax claims, must appoint a tax representative to fulfil the reporting and payment obligations of digital services tax.


Considering the complex mechanism provided for the practical application of the DST, interested businesses are waiting for the announced clarifications from the revenue agency. The implementation of the Italian DST is accompanied by the revamped international debate on the topic due to the recent documents and reports from the OECD and the UN, as well as political pressure exercised by the EU.

Gian Luca NiedduT: +39 02 7780711E:

Barbara Scampuddu T: +39 02 7780711E:

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