By Francesca Amaddeo, Lecturer-Researcher, Tax Law Competence Centre (SUPSI), Manno, Switzerland
On 15 January, the Italian revenue agency released final guidance on the national digital services tax, provision n. 13185/2021.
The Italian digital services tax, implemented by Law n. 145/2018 (as updated by Law n. 160/2019), entered into force in January 2020; however, it required this guidance to clarify some practical aspects for its application.
After the public consultation on the draft, opened in December 2020, this final document represents the opening kickoff.
The Italian digital services tax applies to revenue deriving from some digital services provided by enterprises at a 3% tax rate.
The charge must be paid by 16 March 2021 (for the fiscal year 2020). Moreover, the deadline for filing a special tax return for the digital services tax is 30 April 2021.
Changes in final provisions
If most of the draft details have been confirmed; the final document provides some edits.
Taxpayers involved are unchanged from earlier drafts: enterprises or entrepreneurs, i.e. those carrying on business activity, that satisfy two criteria: (i) realize an income not less than USD 930, 000 (€ 750,000) and (ii) received in the territory of the State an amount of revenue deriving from digital services not less than USD 6,800,000 (€5,500.000).
The widely criticized territorial link has been confirmed: revenue is considered taxable if the user is exploiting the digital services provided through a device localized in the territory.
As already stated by the draft, the location is mainly based on an IP address check or, in the alternative, through other geo-localization methods.
Services covered and exceptions remained unaltered as compared to earlier drafts.
Taxable income and dues
The 3% tax rate applies to taxable income earned within the calendar year.
Taxable income earned within the calendar year is determined at the gross of costs and the net of VAT and other indirect taxes. Revenue deriving from intragroup services is not included in the tax base.
In the final provision, taxable income is determined based on the total amount of revenue per percentage received with a link to Italian territory. It means while the user was located in Italy.
Tax representative
Non-resident persons, without a permanent establishment in Italy, established in a state other than a member state of the EU or of the European Economic Area, with which Italy has concluded neither an administrative cooperation agreement to fight tax evasion and fraud nor a mutual assistance agreement for the recovery of tax claims, must appoint a tax representative to fulfill the reporting and payment obligations of the digital services tax.
Such a representative must be a resident or established in Italy and it is jointly liable for such tax.
It is worth noticing that the wording “even if not liable to the [digital services] tax, but which are part of the same group of non-resident taxpayers involved” creates some doubt about its application.
Francesca Amaddeo
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