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Spotlight on ...

GLOBAL

DIGITAL TAX TRENDS

IN 2020

Text: Alan Rhode, Co-Founder Taxmen

In January 2020, Italy introduced a digital service tax on revenues (not necessarily
profits) made by large digital service groups from (1) digital advertising, (2) marketplace
intermediation services or (3) sale of online personal data.

he new 3% tax applies to suppliers, whether studying unilateral measures to tax the local income of
established in Italy or not, making more than foreign digital players.
T750 million euros in global yearly revenues
with digital services, but only when at least more International tax rules have aged badly
than 5.5 million euros of these revenues are earned The reason for the “sprouting” of national digital taxes lies
in Italy. The tax only concerns the share of revenues in the fact that most international tax rules, introduced in
generated in Italy. the pre-digital era, are no longer able to keep the pace of
the global economy. They tend to facilitate tax gaps.
The Italian digital service tax is clearly meant to directly
target large household names in the digital industry, such A concrete example: if a multinational group supplies
as Amazon, Facebook, Google, etc. deemed not to be digital services to all Europe exclusively from its offices
paying enough taxes in Italy on services provided to local in Ireland or Luxembourg (two low-tax jurisdictions), its
users. revenues will most likely be subject to corporate tax only in
Ireland or Luxembourg, and not in the country where the
With this initiative, Italy follows the path of France, which services are consumed/supplied to.
started its own digital tax in 2019. Other European coun-
tries are tempted to follow these examples and are already

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