After France, Italy also sets up a digital tax

The Italian Budget Law 2019 (Law no.145/2018), published in the Official Gazette (G.U.) on 1 January 2019, introduces a “new” tax on digital services (Italian Digital Services Tax or the DST). The DST will apply with respect to digital transactions performed, individually or at the group level, by taxable persons either established or non-established in Italy, in the course of their business activity.

The Ministry of Finance is required to issue an implementing decree within the following four months (i.e., by 30 April 2019) and the DST will apply as from the 60th day after its publication in the Official Gazette.

The Italian Tax Authority is further required by the law to issue guidelines on the application of the DST.

Main features of the DST

The Italian DST is an indirect tax with the following characteristics:

• Periodical: it is calculated on a quarterly basis and it is paid by the end of the month following each quarter
• Levied on turnover: the taxable base is the amount of revenues on digital supplies , net of Value Added Tax (VAT)
• Tax rate: 3% of Taxable base
• Tax period: the calendar year
• An annual Return will be required: to be filed by the end of the 4th month following each calendar year (i.e., 30 April)

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