The 2020 Italian draft budget (Draft Budget) introduces a 3% unilateral ‘Digital Services Tax’ (DST). The DST will apply beginning January 1, 2020. The Italian government expects the DST to generate roughly 708 million EUR in tax revenue per year.
Although it does not contain any specific references, the Italian DST is structured similarly to the recently introduced French DST and the European Commission’s 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).
The Draft Budget re-introduces and modifies the Italian unilateral DST.
Unlike the previous budget, the DST’s entry into force this time is not contingent upon any further legislative intervention by the government or the Finance Minister.
Multinational enterprises that derive a significant portion of their revenues from providing digital services should begin assessing the extent to which the Italian DST could affect their operations.
Such assessment includes determining whether the digital services they provide fall within the scope of taxable digital services, as well as determining obligations that should be fulfilled and procedures that should be implemented.