The Italian Parliament approved on December 23, 2013, the Finance Law for 2014 (so called “Legge di Stabilità” – no. 147/2013). Such a law has provided for the set up of the so called “web tax”.
At a first stage, the web tax should have been both for VAT and corporation income tax perspectives. The VAT aspects of the web tax has now been repealed (please see below).
According to the published version of the above “Legge di Stabilità” on the Italian Official, from a VAT perspective, a new article should have been introduced in the Italian VAT Law (article 17bis, Presidential Decree no. 633/1972). In the main, according to the version of the law which has never entered into force:
- taxable persons that are going to purchase online advertising services or sponsored link online, even if via media centers and third operators, have to buy these services from taxable persons registered for VAT purpose in Italy;
- the online advertising and the sponsored links which are displayed on the web pages of the online search engines (so called search advertising) and which can be displayed in Italy when a certain web site is visited or during the usage of on line services through a fixed line or mobile network or device, has to be purchased only from editors, advertising agencies, search engines or other advertising operators, registered for VAT purpose in Italy. Such a legislative provision applies even in the case the purchase is carried out via media centers, third operators and advertisers.
Please note that, according to a decree approved by the Italian Government on February 28, 2014 and published on the Official Gazette of the Italian Republic (i.e. Law Decree n. 16 dated March 6, 2014), the above mentioned VAT aspect of the web tax is now repealed.
CORPORATE TAX – MEANS OF PAYMENT
For the sake of completeness, according to the above “Legge di Stabilità”, the so called web tax should have impacts from a corporate income tax perspective for companies operating in the on line advertising business and the ancillary services. In the main:
- specific rules and procedures are introduced and definitively in place starting from January 1, 2014, in order to determine the transfer price of intercompany transactions related to the above business (preventing from using cost based methods);
- specific payment methods have to be used in the case of on line advertising services and ancillary services (e.g. bank transfers). The aim of the legal provision is to track such transactions: in this respect, a specific decree has to be issued in order to determine the ways for the financial operators in order to communicated the concerned transactions paid via certain financial means. This provision needs an implementing legislation yet to be issued.
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