Italian and foreign entities providing
"digital activities," i.e. digital platforms,
digital applications, databases, virtual
warehouses, digital services, as well as
other activities which will be determined
in the coming months through the issues
of an Italian Decree.
The rule was approved with the Italian
Finance Bill for 2018, with discussions
dating back to 2013, when an effort to
introduce the tax was eventually rejected.
several amendments, and there may be
more to come.
The Italian web tax will go into effect
starting January 1, 2019. The time before
then could allow, from one perspective,
improvements and specifications, or from
another perspective, possible amendments
to conform with a European web tax
which is under consideration by France,
Germany, Spain and Italy.
The tax is levied only on business-to-
business (BtoB) transactions concerning
services (mainly data analytics, cloud
computing and web advertising),
while e-commerce transactions will be
exempted. The tax will be applicable only
if the number of transactions exceeds
3,000 per year.
The tax will be levied through a
withholding tax of three percent. The
withholding tax will be applied to Italian
customers so that, for example, if the cost
for the service is 100Euro, the Italian
customer will pay 3Euro to the Italian
Tax Agency and 97Euro to the service
provider.
The tax is not applicable to (i) BtoB
services rendered to entrepreneurs under
flat-tax regimes, to (ii) BtoB services
rendered by providers whose yearly
3,000 and to (iii) business-to-consumer
services and all e-commerce transactions
(i.e. digital transactions concerning
goods).
Large online retailers Amazon, Apple
and Google recently have agreed to pay
to Italian tax authorities through ad hoc
agreements respectively 100MEuro,
318MEuro and 306MEuro.
The reason for the tax assessment from
Italian authorities was that these large,
multinational companies would have, in
the past, carried out commercial activity
in Italy without declaring a permanent
establishment.
Considering such big amounts, it
seems that the Italian web tax could
appear like a "gnat" to the giants of the
web. By contrast, it could result in being,
once again, an additional burdensome tax
for Italian companies.
Only time will tell, however, whether
and how these laudable Italian plans will
actually be put into practice and what the
outcome will be.
FDL Studio legale e tributario since 2013. Her main
areas of practice are mergers and acquisitions,
corporate law, retail law and general commercial
law matters. She represents and advises Italian,
as well as international corporations, in Italian and
cross-border transactions.
Studio legale e tributario. He is in charge of tax
matters, with a particular focus on tax litigation
and tax assessment.
Piazza Borromeo, 12
Milano, Italy 20123
f.deluca@studiotributariodlp.it
fdl-lex.it