The double approval of the new Budget Law 2020 has given the definitive green-light for the entry into force of the new Italian web tax, indeed in a revised form compared to that already approved last year by the past Budget Law for 2019. In any case, the most important feature to note is that the Digital Services Tax (DST) is applicable from 1st January 2020 even if fully effected, would be however repealed when, and if, the internationally agreed provisions on digital economy taxation, managed at the moment by the OECD, became applicable. That's the effect of the so-called sunset clause, which is generally a part of a law, or contract, which states when it will end.
To which subjects does the new digital tax apply – First of all, the DST applies to revenues resulting from the provision of certain digital services obtained during a calendar year. The new taxable subjects substantially are businesses that, individually or in a group-wide entity, meet both of the following conditions in the calendar year before the one in which the taxable revenues are obtained: ● on a worldwide base, they have accounted a total revenues of not less than EUR750 million; ● they have obtained in Italy revenues of not less than EUR5.5 million from the digital services provided.
Taxed services - The new web-tax will be calculated on the revenues resulting from the provision of the following services: ● the placing on a digital interface of advertisings targeted at users of that interface; ● the making available to users of a multi-sided digital interface which allows them to be in contact and to interact with each other, and which may also facilitate the provision of underlying supplies of goods or services directly between users; ● the transmission of data collected from users and generated from the use of digital interfaces. However, such revenues will not be taxed if the services are supplied to companies that are deemed to be parent, subsidiary or sister companies as per article 2359 of the Italian Civil Code.
How the tax due is calculated – the new digital services tax will be calculated by applying the 3% rate to the amount of taxable revenues obtained by the taxable subject during the calendar year. Taxable entities or individuals, will have to pay the DST by February 16 of the calendar year following the one in which the taxable revenues have been realized. The same taxable subject will have to file an annual specific return to declare the taxable services by March 31 of the same year. For companies belonging to the same group, a single company can be appointed to fulfill the obligations resulting from the DST provisions in place of all other firms. Non-established subjects, without a permanent establishment in Italy or Italian VAT registration shall, if they qualify as digital service taxable entity, obtain an ad hoc DST identification number by submitting an application to the Italian Revenue Agency. The application will follow the procedures fixed by the Director of the Revenue Agency. As far as the DST assessment, penalties, collection and litigation are concerned, the Italian VAT rules shall apply, if compatible. However, the Director of the Revenue Agency will issue one or more Revenue Agency decrees establishing how to apply the DST.
When the new tax will debut? – As already said, the above provisions shall apply from 1st January 2020. Yet, it’s important to point out that the Italian DST can be repealed if and when the internationally agreed provisions on digital economy taxation became applicable in the future.