Italy stiffens terms of digital services tax in 2025 budget

Italy will strengthen its digital services tax as part of plans to raise more revenues in the 2025 budget, Deputy Economy Minister Maurizio Leo said on Wednesday, in a move that could trigger retaliation from the United States.

Washington has threatened tariffs over unilateral digital taxes in Europe such as the Italian levy, which applies to Meta Platforms Inc (META.O), opens new tab, Google (GOOGL.O), opens new tab and Amazon (AMZN.O), opens new tab and has so far raised 400 million euros ($436 million).

A senior Italian official, who declined to be named, said the government had authorised the tax increase without receiving any tacit approval from Washington.
“Our politicians have decided to take a risk,” the official said.
Italy in 2019 introduced a 3% levy on revenue from internet transactions for digital companies with sales of at least 750 million euros ($817.13 million), at least 5.5 million of which are made in Italy.

The government will remove these minimum conditions necessary for the tax to be applied, Leo said, confirming an earlier Reuters report.
Leo did not provide full details on the revenues expected from the enhanced levy.
Italy had planned to scrap its digital tax following approval of the first pillar of a global minimum tax that aimed to reallocate taxation rights on about $200 billion of corporate profits to the countries where the companies involved do business.

However, that international legislation has never come into force, having become bogged down in disagreements between the U.S., India and China, and despite Italy’s efforts to revive talks under its presidency of the Group of Seven (G7) advanced democracies this year.
An agreement between the U.S. and five EU countries including Italy that resulted in a freeze of Washington’s threatened tariffs formally expired in June.