The 2019 Italian budget law (‘Law’) introduces a ‘new’ digital service tax (DST), repealing the previous one which never entered into force due to the lack of implementing secondary legislation.
During the Italian government and EU Commission negotiations for defining the 2019 Italian budget, the DST was identified as a revenue raiser (estimated at 150 million EUR for 2019 and 600 million EUR for each of 2020 and 2021).
Although details about the new DST have not been released, the new DST is expected to employ a structure similar to the EU Commission proposal (2018/0073 (CNS) “Proposal for a Council Directive on the common system of a digital services tax on revenues resulting from the provision of certain digital services”).
Considering that the DST is likely to enter into force around the end of June, multinational entities that derive a significant portion of their revenues from providing digital services should begin assessing the extent to which the Italian DST could potentially affect their operations. Such assessment includes determining whether the digital services they provide fall within the definition of taxable digital services, as well as determining which obligations should be fulfilled and which procedures should be implemented.