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Why Italy’s ‘Google tax’ is a doubtful proposition

Italy’s newly implemented web tax (the so-called ‘Google tax’) was approved by the Italian Parliament on 27 December 2013. The new tax is the Italian legislators’ latest attempt to target the Italian profits of multinational internet companies and to simultaneously attack complicated tax planning structures aimed at limiting the local tax profile of web-based multinationals in Italy.

The new legal provision states that the sale of advertising links banners and other spaces on websites that can be viewed in Italy (which includes the Italian features of non-Italian websites) needs to be managed by entities which have registered themselves for an Italian VAT number. In brief all web advertising pop-ups banners etc which appear on the internet in Italy must belong to registered Italian entities which pay income tax in Italy.

This appears to run contrary to one of the main principles set out by EU law...

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