Italy - Amendments to the Web Tax

Tax on Digital Services, better known as Web tax (or DST) was introduced back in 2018 and applies at a 3% rate on the revenues deriving from digital services. Taxable persons were entities conducting business activities that, either individually or at a group level, jointly met certain criteria during the calendar year preceding the one in which the tax had to be applied. Specifically, these criteria were: achieving total revenues of no less than €750,000,000 globally, and generating at least €5,500,000 in revenues from digital services within the territory of the State.

During the discussions on the 2025 Budget Law, the Italian legislator initially proposed removing these thresholds, raising concerns among small and medium enterprises. 

In the final version of the 2025 Budget Law, the first threshold of €750,000,000 in total global revenues was maintained, while the second threshold related to revenues generated within the Italian territory was eliminated. Consequently, the Web Tax still applies to revenues derived from digital services generated on Italian territory, without a specific threshold, as long as the revenues generated globally are no less than €750,000,000. This effectively limits the tax burden to multinational groups of significant size (see Law no. 207 of December 30, 2024, published in the Official Gazette on December 31, 2024).

Additionally, the Budget Law has introduced a mandatory obligation to pay the tax in advance. Entities subject to this law must make a thirty percent advance payment of the tax due by November 30, based on the amount of tax paid for the preceding year. The remaining amount must be paid by May 16 of the following year. This change aims to ensure timely collection and reduce the risk of non-compliance.

It is important to note that revenues derived from the following digital services are subject to this tax: targeted advertising to users of a digital interface (online advertising), the provision of a multilateral digital interface that allows users to connect and interact with each other, including facilitating the direct supply of goods or services (user intermediation services), and the transmission of data collected from users and generated through the use of a digital interface, as provided by Article 1, paragraph 37, of the 2019 Budget Law.