A new circular has been published by the Italian Revenue Agency regarding the application of Digital Services tax. This circular provides better guidance on the application of the country’s new Digital Services tax. This involves which companies are concerned in terms of revenue, sales thresholds, services covered, and exclusions.
The Circular also provides guidance on the annual declaration (return) and payment of DST, including a new notification of the change in deadlines announced earlier in March.
This includes that DST payment and declarations are now due by 16 May and 30 June of the following year, respectively, instead of the prior deadline of 16 February and 31 March. It is also confirmed that the deadlines for the payment and declaration for the first year are 16 May 2021 and 30 June 2021, instead of the prior extensions to 16 March 2021 and 30 April 2021.
This Digital Services Tax (DST) is an indirect tax on gross payments and not a tax on income. As such, the DST does not fall within the scope of Italy’s tax treaties. Regarding deductibility, it is provided that DST can be deducted from the income of taxable persons for IRES (corporate tax) and IRAP (regional tax) purposes.