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November 6, 2024 Italy proposes significant changes to the Digital Services Tax
With the approval of the 2025 Italian Budget Law draft on 15 October 2024, the Italian government is proposing a significant amendment to the Digital Services Tax (DST) regulation, outlined in Article 4 of the new draft law. This amendment removes the previously required revenue thresholds, expanding the scope of entities potentially liable to the application of 3% DST. What would change? Revenue thresholds would be removed. Companies would no longer need to exceed €750m in global revenues and €5.5m in Italian revenues from digital services to be subject to DST. Any business generating revenues from digital services in Italy would automatically be subject to the tax. Who would businesses be affected?
Compliance obligations Because no transitional phase is planned, companies that qualify as taxable persons under the new rules would need to comply with relevant reporting and accounting obligations starting from 1 January 2025. Next steps The Budget Law is currently under parliamentary discussion and may be subject to changes. However, companies potentially affected should carefully evaluate their position, especially if they currently fall within the DST definition of providing digital services as per paragraph 37 of Article 1 of Law no. 145/2018:
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