In the Circular letter no. 3/E, published on 23rd March 2021, the Italian Tax Authority clarifies various issues related to the Italian Digital Services Tax (ITA-DST), that entered into force on 1st January 2020 and replaced the Italian “Web Tax”.
The Italian Tax Authority clarifies, in particular:
- the nature of the digital services falling within the scope of the ITA-DST;
- excluded services;
- calculation method of the taxable revenue and the proportion of that revenue deriving from services linked to the Italian territory;
- the registration process, the preparation of accounting documentation and the submission on the ITA-DST annual return.
ITA-DST shall be due by subjects carrying out business activities that, individually or at group level, jointly meet, in the previous fiscal year, the following thresholds:
- total amount of revenues equal to or exceeding €750 million;
- an amount of revenues from digital services (arising in Italy) equal to or exceeding €5,5 million.
ITA- DST applies to revenues derived from the following services:
- provision of advertising on a digital interface targeted to users of the same interface;
- provision of a digital multilateral interface aimed at allowing users to interact (also in order to facilitate the direct exchange of good and services);
- transmission of data collected from users and generated by the use of a digital interface.
Revenue is considered as taxable when invoiced and the tax is due if the user of a taxable service is located in Italy.
The following services are not considered as digital services for the purposes of the ITA-DST:
- direct supply of goods and services, as part of a digital intermediation service;
- supply of goods or services ordered through the website of the supplier, if the supplier does not perform intermediary functions;
- provision of a digital interface whose exclusive or principal purpose is that of supplying the users of the interface, by the person who manages it, digital content, communication services or payment services;
- provision of a digital interface used to manage financial services;
- transfer of data by the subjects indicated in the point above;
- the performance of the activity of the organization and management of telematic platforms for the exchange of electricity, gas, environment certificates and fuels, as well as the transmission of the related data and any other related activity.
ITA-DST taxable revenues are assumed gross of costs and net of VAT and other indirect taxes. The fees related to the provision of a digital multilateral interface that facilitates the sale of specific products subject to excise duties, having a direct and inseparable connection with the volume or value of such sales, are not considered.
ITA-DST rate and compliance obligations
ITA-DST rate is equal to 3% and applies on revenues from digital service generated on a calendar year basis, starting from 2020.
ITA-DST must be paid and the annual ITA-DST return must be filed by respectively 16th May and 30th June of the calendar year following the one of receipt and accounting of the relevant taxable consideration.
As for groups of companies, a single group entity must be named for the fulfilment of the obligations related to ITA-DST for the whole group.
Non-resident subjects without a permanent establishment in Italy and subjects established in a State other than a European Union Member State or of the European Economic Area with which Italy has not concluded a mutual assistance agreement for the recovery of tax claims, must appoint a Tax Representative for the fulfilment of the ITA-DST obligations and payments.