The digital services tax text amendment that was included in the budget law has been finally passed and is effective since January 1st 2020.
The text has been elevated to match the EU directive draft model in its majority part.
The comparation to it results in the following summary points:
- Thresholds: WW revenue is the same €750M.
Local in scope digital services of at least €5,5 M.
- In scope services are the same 3 and tax rate is the same (3%).
- Not in scope activities:
- Same than in the EU text, but adding “services for the management of platforms for the exchange of electricity, gas and carbon credits” and “making available a digital interface for the supply of goods subject to excise duties”.
- IC transactions out of scope equally.
- Formalities: a special monthly ledger to record the DST revenues will required.
- Determining the user location is based on the IP address also.
- A DST identification number will be required and a tax representative is to be appointed by the foreign digital services rendering company. Local subsidiaries of PEs are jointly liable for the DST.
- First cash payment of the DST for FY 2020 will be due February 16th 2021, while its return is to be filed the last day of March 2021.
The tale became true finally and the Italian DST is in force now. Deeper guidance is needed about how to interpret in real cases the IP address part of the regulation or about how to exercise the new formal requirements.
Let’s hope for a much faster elaboration of those Decrees as practical guidance will be clearly needed and the admin duty is for sure going to be heavy in practice for the affected companies.
To be seen if the Tax Agencies of the EU countries that have a DST in place with a same source foundation or are about to pass it share a minimum level of interpretation guidelines as the practical issues will be the same and the digital services revenues taxed connected in many cases.
For MNEs operating in the EU such a common interpretative guidance would be highly appreciated for what is expected to be the “interim” period until the OECD global solution is nailed and in force.