Italy Considering a Digital Activities Tax on Virtual PEs

According to recent reports, the Italian government is currently considering the introduction of a withholding tax on payments made by Italian customers to a foreign supplier when the supplier is considered to have a significant virtual presence in Italy without a physical permanent establishment. Although not yet finalized, a foreign supplier would be deemed to have a significant virtual presence if sales to Italy exceed EUR 1 million in a 6-month period.

The rate would be 25% for payments …