The Italian Revenue Agency, on January 15, 2021, published the final executive regulation providing guidance on the Italian digital service tax (IDST). The Regulation’s publication follows a public consultation that launched on December 16, 2020 and concluded on December 31.
Generally, the Regulation remains unchanged from its draft version, other than certain amended concepts that appear to align with the EU proposal. However, Article 2 of the Law Decree n. 3 of January 15, 2021, delays the IDST’s payment due date from February 16, 2021 to March 16, 2021. In addition, the IDST’s tax return filing date is delayed from March 31, 2021 to April 30, 2021 (the delays are also reflected in the Regulation).
While the Regulation clarifies many aspects of the IDST, certain items regarding its interpretation and operation remain unresolved. Since additional time is available before the first IDST payment due date, the Italian Revenue Agency is expected to issue a circular letter (the Guidance) as soon as possible in order to address unresolved issues about the IDST, including (i) in-scope and out-of-scope digital service’s and (ii) criteria for territoriality. In the event taxpayers fall within the IDST’s scope, the Guidance should provide clarity on determining tax liability and avoiding double taxation risk.