24 January 2025

Italy approves significant changes to the Digital Services Tax

  • A change in Italian law has removed the annual revenue threshold for taxing qualified digital services taking place in the Italian territory, effectively broadening the applicability of the tax.
 

With the approval of the 2025 Italian Budget Law (n. 207 of December 30th), the Italian government removed the €5.5m threshold for annual revenue from qualified digital services taking place in the Italian territory. This change means that any level of revenue generated in Italy will now be subject to the Digital Services Tax (DST), provided the global threshold of €750m in worldwide revenue is met.

Additionally, the Law introduces new payment terms:

  • An advance payment equal to 30% of the DST owed for the previous year will be due by 30 November of the same calendar year.
  • The balance will be due by 16 May of the year following the reference year.

What has changed?

The €5.5m threshold for annual revenue from qualified digital services relevant in the Italian territory has been removed. As a result, any revenue for digital services relevant in the Italian territory, irrespective of the amount, will be subject to DST if the remaining threshold is met. The remaining threshold is €750m in worldwide revenues.

Practical implications

Wider applicability: The removal of the revenue threshold for Italian digital services means that parties with a small digital activity in Italy but with significant global revenues may now fall within the scope of the DST.

Adjusted compliance timelines: The advance-payment obligation requires affected taxpayers to make earlier financial outlays than before. Businesses will need to estimate their DST liabilities accurately to comply with the November advance-payment requirement.

Compliance obligations

Companies that qualify as taxable persons under the new rules will need to comply with relevant reporting, accounting and payment obligations starting from 1 January 2025.

Next steps

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, involving the:

  1. Placement of targeted advertising on a digital interface
  2. Availability of a digital interface allowing users to interact and facilitate the supply of goods/services directly between users
  3. Transmission of data collected from users and generated through digital interfaces
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Contact Information

For additional information concerning this Alert, please contact:

Studio Legale Tributario,

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2025-0318