Italy To Implement Digital Tax From January 2020

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Italian government

Country pushes ahead with 3 percent levy on internet transactions as digital tax negotiations continue on Europe-wide and global level

Italy’s proposed tax on large digital companies is to be included in its 2020 budget, set for submission to the European Commission this week.

The country confirmed last week that it is planning to implement a 3 percent tax on large-scale online sales beginning next year.

The 3 percent levy is to apply to internet transactions from the likes of Facebook, Google and Netflix.

In spite of making billions in profits, such firms have been able to reduce the taxes they pay to a minimum by maintaining their European headquarters in low- or no-tax countries such as Ireland or Luxembourg.

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Plans for an EU-wide digital tax have so far foundered upon the objections of those countries, forcing member states including the UK and France to push ahead with their own national levies.

Italian Economy Minister Roberto Gualtieri told a parliamentary hearing last week that “profits have to be taxed where they are made”.

The Italian tax is to be applied to companies with annual revenues of at least 750 million euros (£656m) and digital services worth more than 5.5m euros.

The measure, which is expected to bring in around 600m euros per year, is in line with recent proposals from the Organisation for Economic Cooperation (OECD).

It was initially proposed last year under Italy’s previous coalition government, which fell apart in August.

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The current coalition between the 5-Star Movement and the Democratic Party is due to send its budget to the European Commission by 15 October, and the tax is to be included in it, Reuters reported, citing coalition sources.

The scheme is to take effect from January, operating under a self-assessment regime under which companies submit their calculation of the amount owed, subject to possible checks.

The coalition is reportedly planning to adjust its plans if the EU eventually succeeds in bringing  in common digital taxation rules.

EU Economic Affairs Commissioner-designate Paolo Gentiloni, a former Italian prime minister, has said he plans to coordinate EU digital taxation efforts, promising the bloc would bring in a tax even without a global agreement over the issue.

Italy launched an investigation into Netflix over unpaid taxes earlier this month, after a Milan court reportedly said the firm should pay taxes in Italy in spite of no longer having offices there.

Netflix has, however, last week announced a production partnership with Mediaset, Italy’s biggest commercial broadcaster, that will see it re-establish offices in the country and resume paying taxes there.

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