Key takeaways
- Italy’s 2025 Budget Law broadens the Digital Services Tax (DST) by removing the €5.5 million Italian revenue threshold.
- Now, any company with global revenue above €750 million is subject to DST, regardless of in-country digital revenue.
- The 3% DST applies to digital advertising, platform intermediation, and user data transmission.
- Payments are due in two installments: 30% advance (Nov 30) and final balance (May 16) of the following year.
- The change could increase the tax burden for multinational tech companies and potentially trigger double taxation.
In short: Italy's 2025 Budget Law expanded its Digital Services Tax (DST) by removing the €5.5 million Italian revenue threshold. Any company with global revenue of at least €750 million now pays the 3% DST on taxable digital services in Italy. Payment is a 30% advance by November 30 and the balance by May 16.
Update (October 2026): The change took effect on January 1, 2025, under Law No. 207 of 30 December 2024, Italy's 2025 Budget Law.
Italy's 2025 Budget Law has greatly widened the scope of its Digital Services Tax (DST). It removed one of the two previous revenue thresholds, which brings more companies into the tax.
Why did Italy introduce a DST?
Italy introduced its DST to tax revenue from digital services provided in Italy and to tackle tax avoidance by multinationals. Italy brought in the DST in 2019 (L. 145/2018), effective from January 1, 2020, following OECD and EU recommendations. The tax addresses concerns about multinationals shifting profits to low-tax countries. Italy's DST has one of the broadest scopes in Europe. We cover this in more detail in The Evolution of Digital Taxation in Africa.
Who does Italy's DST apply to?
Italy's DST applies to any business, wherever it is resident, that provides taxable digital services in Italy. Non-resident taxpayers must get an Italian tax ID. The exception is if they have a fiscal representative or permanent establishment in Italy.
Which services are taxed, and at what rate?
Italy's DST is a 3% excise duty on gross taxable revenues. It applies to:
- Digital advertising services – Targeted ads delivered through digital interfaces.
- Digital interfaces – Platforms that let users interact.
- Transmission of user data – Sale of user-generated data collected via digital platforms.
Sales of advertising space are also taxable, including intermediation via digital platforms.
The tax aims to stop multinationals from getting around permanent establishment rules by splitting up their operations.
How is a taxable service determined?
A digital service is taxable in Italy when the user is located in Italy, based on IP tracking or geolocation. Direct purchases of goods and services are excluded, even when a platform acts as intermediary. A service counts as rendered in Italy if:
- Ads are displayed to users in Italy.
- A user in Italy accesses a digital interface.
- Data is generated by a user in Italy.
How has the taxpayer base expanded?
The DST taxpayer base now covers every company with global revenue of at least €750 million. Before the change, the DST applied only if a company met both of these thresholds:
- Global revenue of at least €750 million.
- Digital services revenue in Italy of at least €5.5 million.
The 2025 amendment removes the second threshold. Any company above €750 million in global revenue is now subject to DST, whatever its digital services revenue in Italy. You can also read Danish Parliament Closer to Implementing Global Minimum Tax.
What are the DST compliance and payment deadlines?
Italy's DST is paid in two instalments: an advance by November 30 and the balance by May 16. The tax is calculated on gross revenue with no deduction for costs, but excluding VAT and other indirect taxes. The updated payment dates are:
- Advance payment – 30% of the prior year's DST, due by November 30.
- Final payment – Remaining balance, due by May 16 of the following year.
What is the market impact, and is there a risk of double taxation?
The wider DST raises the tax burden on more businesses and may discourage investment in Italy. The DST counts as an indirect tax with no pass-through obligations. As a result, only resident taxpayers can deduct it from corporate income tax. Foreign companies may face double taxation, as no tax credit or treaty relief is available.
What does this mean for businesses?
Any group with global revenue of at least €750 million now needs to check its Italian digital revenue, however small. There is no longer a minimum amount of Italian revenue before the tax applies.
- Map your revenue: identify income from digital advertising, digital interfaces and user data linked to users in Italy.
- Get an Italian tax ID: non-resident businesses need one, unless they have a fiscal representative or permanent establishment in Italy.
- Plan your cash flow: budget for the 30% advance each November 30 and the balance each May 16.
- Check double taxation: foreign companies usually cannot offset the DST against their home tax.
For how digital services taxes fit into wider tax changes, see 5 Global Indirect Tax Trends to Look Out For.
Key dates
- January 1, 2020: Italy's DST takes effect.
- January 1, 2025: the €5.5 million Italian revenue threshold is removed.
- November 30 each year: 30% advance payment, based on the prior year's DST.
- May 16 each year: balance payment for the previous year.
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Frequently asked questions
What is Italy’s Digital Services Tax (DST)?
A 3% excise tax on gross revenues from digital advertising, online platforms, and user data sales in Italy.
What changed in 2025?
The Italian-revenue threshold (€5.5 million) was removed, expanding DST to all large global companies exceeding €750 million turnover.
When was DST introduced?
Originally enacted in 2019 and effective since 2020.
Who is affected?
Any multinational or domestic company providing taxable digital services within Italy.
How is DST calculated and paid?
On gross taxable revenue, excluding VAT, paid in two installments—November 30 (advance) and May 16 (balance).
Can DST be offset against corporate taxes?
Only for resident taxpayers. Foreign entities typically cannot claim relief, creating double taxation exposure.
What is the rationale for DST?
To ensure fair taxation of digital businesses generating significant revenue in Italy without a permanent local establishment.
