The Italian Revenue Agency (ITA) has released the 6/2025 Tax Principles Guide (hereinafter referred to as "the Guide"), which clarifies the method for determining the tax base for Digital Services Tax (DST) in the online gaming and gambling industry. This guide resolves a long-standing dispute in the industry over whether the tax base should be total revenue or should deduct the bonuses paid to players and total profits.
Digital Services Tax (DST) Overview
Italy's Digital Services Tax is a 3% tax levied on specific digital service revenues, applicable to "taxable entities" that meet the following conditions:
Earning revenue from digital services within Italy
In the calendar year prior to generating taxable revenue, the global total revenue of the entity or group must be at least 750 million euros
It is noteworthy that the original "double threshold" standard is no longer applicable from January 1, 2025.
Scope of Taxable Digital Services
According to Italian tax law, taxable digital services mainly include three categories:
Providing targeted advertising services on digital platforms
Providing digital multilateral interfaces that allow users to interact with each other
Transferring data collected from users and data generated by users using digital interfaces
This guide specifically targets digital multilateral interface services used in online gaming and gambling.
Determination of Tax Base in the Online Gaming and Gambling Industry
The guide clearly resolves the core dispute within the industry: when calculating the DST tax base, platform operators, acting as intermediaries, only need to include platform usage commissions in the taxable income, and should not include the total amount of player bets. Specifically:
Total bets: Clearly excluded from the DST tax base
Player profits: Must be deducted from the tax base, even if the profits in a single tournament exceed the betting amount
Player rewards: Bonuses provided to attract players to bet, as they do not constitute actual payments or remuneration by the platform, should also be deducted from the tax base
This interpretation is based on Article 1(37) of the 2019 Budget Law, Decree No. 15185/2021 Articles 3.1 and 3.6, and Circular No. 3/E/2021 Section 4.2.
Industry Impact and Compliance Recommendations
KPMG experts point out that determining the tax base is one of the most complex issues of DST, especially in businesses with complex operations or multiple intermediaries in the value chain. The release of the new guide provides the following key insights for the industry:
Risk allocation is clear: As intermediaries, platform operators do not bear risks related to user activities, only operating as technical interfaces
Review of historical declarations: Enterprises should reassess the accuracy of past DST declarations to avoid overestimating the tax base
Future compliance adjustments: Necessary adjustments to tax calculation mechanisms are required to ensure compliance with new regulations
Conclusion
The guide released by the Italian Revenue Agency provides much-needed clarity for the application of DST in the online gaming and gambling industry, resolving long-standing disputes about the scope of the tax base. Industry enterprises should:
Immediately review the compliance of existing tax calculation methods
Adjust accounting systems and reporting processes as necessary
Consider seeking professional tax advice to ensure full compliance with new regulations
As the digital economy rapidly develops, the rules for taxing digital services are also evolving. This specific guidance from Italy for a particular industry reflects the deepening understanding of emerging business models by tax authorities and provides a reference case for other countries considering similar tax policies.
For online gaming and gambling platforms operating in Italy, timely understanding and application of this new regulation not only helps reduce tax risks but may also achieve reasonable tax savings through optimized tax base calculations.
