The Budget Law for 2025 introduced significant changes concerning the Digital Services Tax. The Digital Services Tax (Web Tax) was introduced in Italy in 2018 through tax provisions. The last effective version of this type of tax was in place until the adoption of Budget Law 2025.
The tax on digital services introduced through Budget Law 2018 set up the framework for a collection of the Web Tax at 3% on the turnover that digital giants (such as Meta and the likes) generated by providing digital services to customers based in Italy.
The provisions of Tax on Digital Services that defined the calculation metric for the digital platform operators were based on two pillars: objective and subjective. However, introducing the Budget Law for 2025 eliminates the subjective parameter.
Let’s dive into the specifics of this significance for social media platforms when it comes to the structure of the tax collection framework.
Digital Services Tax Italy
Implication of changes
The pivotal principle states that for revenue to be taxable under the Italian Digital Services Tax, the revenue generated from the provision of digital services must be located in the territory of Italy. Using different validator tools via the digital interface is possible to identify the user’s location.
As mentioned above, adopting new provisions reshapes the tax framework of digital interfaces. Before the adoption of the amendments, the Italian Revenue Agency, to be in the position to tax digital platform operators with the gross receipts tax, needed to be able to verify the existence of subjective and objective revenue conditions.
Taxable persons who are carrying the specifically indicated types of provision of digital services that individually or at group level have achieved in the preceding calendar year the following revenues were treated as taxable persons under the Web Tax:
- Subjective parameter – revenue from provision of selected digital services in Italy not less than EUR 5.5 million, and;
- Objective parameter – global total turnover of not less than EUR 750 million.
The Budget Law 2025 changed the above. It has withdrawn the existence of cumulative provisions, eliminating the subjective element for the applicability of the digital services tax. Practically speaking, since adopting the new Budget law, the mere existence of the objective parameter makes the digital interface operator liable for digital services tax in Italy.
New Payment Scheme
The rules around collecting digital services tax and payment conditions have also been updated by adopting the mentioned Budget Law 2025. Before the adoption of the new measures, the liable taxable persons were obliged to make the payment of tax payable by May 16 of the following year.
What changed with the Budget Law 2025?
There has been a shift from the single payment solution of the owed tax to a new payment system based on two steps. There are the terms and conditions:
- An advance payment that should be paid by November 30 of the year when the taxable event rises in the value of 30% of the owed tax and;
- Balance payment of the tax due by May 16 of the calendar year following the year when the advance payment was made;
- The submission of the annual declaration concerning the information related to the taxable services remains unchanged.
Introducing the new tax framework for defining the digital interfaces responsible for collecting and remitting Digital Services Tax (DST) will undoubtedly expand the scope of taxable persons. Deleting the subjective country-based parameter will increase the compliance burden for many non-resident digital platform operators and increase the public budget derived from this type of tax.
The digital platforms that are already in scope of the DST in Italy or other countries that have adopted similar regulations should be aware of the tendency of different countries, besides Italy, to eliminate the “national” based revenue factor when it comes to the determination of responsibility to collect and remit local DST.
Aleksandar Delic
1stopVAT Indirect Tax Manager – E-Commerce