The Department of Finance in Italy has opened a public consultation on two directives and a recommendation released by the EU Commission the taxation of the digital economy. All interested parties are asked to comment on each of the documents proposed. Feedback should be sent back no later than June 22, 2018.
This Proposal introduces a long-term tax solution for digital economy, which intends to integrate the concept of "significant digital presence". The virtual presence does not limit or modify the European or national corporate tax law. Requirements for the configuration of a "significant digital presence" include: i) annul total revenue derived from the provision of digital services to users located in the Member State of more than 7 million euro, or ii) number of users one or more of the digital services placed in the Member State in question in excess of 100,000, or iii) number of contracts for the provision of digital services concluded during the tax period by users placed in the Member State in question above 3,000. The three elements are relevant to attributing profits to such significant digital presence.
The Proposal introduces a short-term solution, which refers to an indirect tax on revenues generated by certain digital services characterized by the interaction of the user as a fundamental and indispensable factor. Business activities covered by this levy includes: i) advertising space made available on a digital platform addressed to users; ii) "multi-sided" digital platforms that allow users to find other users and interact with them, and which can facilitate the supply of goods and services directly among the users themselves; iii) the sale of raw data ("raw data", i.e. information that has been collected but not further processed. Enterprises subject to this tax should derive € 50 million revenues from the digital services indicated above in the European Union and earn over € 750 million worldwide annually. A flat rate of 3% which applies to gross revenues generated by all the aforementioned services excluding net value of added tax and other similar taxes.
The document focuses on taxation of companies with significant digital presence as well. It suggests renegotiating the respective Double Taxation Conventions stipulated with third States with a view to modifying them in line with the concept of "significant digital presence".
Sources: Dipartimento delle Finanze
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