Italy new ‘Google Tax’

Tue 22nd Sep 2015

Italy has announced that it will relaunch in 2017 a proposed ‘Google Tax’, which is set to bring it into conflict with the EU.  In 2014, Italy abandoned plans to raise VAT on Italian internet ad’s which are booked in other EU states for tax benefits.

New Italian digital VAT

The Italian Premier, Matteo Renzi, announced this weekend plans for a new digital tax as the EU member states had failed to agree on terms of such a levy over the summer. The aim would be to impose tax revenues on digital services that are provided in Italy from outside of the country without being subject to Italian income taxes.

EU Single Market clash

The 2014 proposal would have forced companies to purchase Italian online advertising from businesses with an Italian VAT registration. The EU, under the Single Market freedom of services rules, would have blocked it.

France is also exploring similar taxes as it contends many agreements concluded by the major internet companies relating to French consumers are similarly concluded in the UK or Ireland for tax reasons.

Italy will have to look at a new tax structure to by-pass European Commission objections. It may seek to subject sales of advertising directly through the Italian regime – but this may put it in contravention of the EU VAT Directive.