5 ms·

Italy declares its "web tax" applicable to any digital service worldwide

51 points by kimi 2y ago

seydor 2y ago
Success must have a price. Let's call it 'success tax'
- idle_zealot 2y ago
  It's called a progressive tax, and it's a great idea.
  - jstanley 2y ago
    If taxing something discourages it, we should instead create a "failure tax", which you only pay if you don't make very much money, to discourage failure.
    - Terr_ 2y ago
      In that case, have a tax on tax, where the government takes 100% of it's own tax receipts, which should logically lead to no taxation at all, right? :p
      - teitoklien 2y ago
        There are taxes on tax too, its called “cess”, a lot of countries have that too -_- , so you pay taxes, and then there is an extra tax on the tax collected too.
    - unglaublich 2y ago
      A profit tax doesn't discourage increasing profit as long as the marginal gain is positive.
- nhinck3 2y ago
  Is it that different to any sale tax?
  - newaccount74 2y ago
    The problem with "sales tax", or "value-added tax" in Europe, is that it applies only to consumers. Businesses can directly deduct any VAT that they pay from the VAT that they owe. If they pay more VAT than they owe, they can get it back. This means that Google, Meta, etc., who make almost all of their revenue from B2B transactions, effectively pay no VAT. The "digital services" tax changes that, by introducing a tax on those revenues.
    - victorbjorklund 2y ago
      "If they pay more VAT than they owe, they can get it back." Worth noting is that generally means the company has higher costs than revenues (not something you want).
      - newaccount74 2y ago
        Or if you have tax exempt revenue, like B2B sales to other countries.
        victorbjorklund 2y ago
        That too
    - ninalanyon 2y ago
      > The problem with "sales tax", or "value-added tax" in Europe, is that it applies only to consumers. That's not quite correct. At each transaction you pay VAT on the margin, that's why it's called Value Added Tax. So if company B buys from company A and sells to company C then company B pays VAT on the difference between what it charges company C and what it paid company A.
- high_na_euv 2y ago
  Well, every gains tax is kind of success tax, aint it?
- unglaublich 2y ago
  Yes, if your success relies on a complex framework of infrastructure and societal services, then your success owes that infrastructure a share.
  - teitoklien 2y ago
    That infrastructure does get its share, its called income taxes, sales taxes from products people buy, payroll taxes, mandatory employee provident fund contributions which governments use as their personal piggy bank in a lot of countries , and most importantly the product/service itself, good luck swimming in your pool of tax dollars, when that dollar is worth nothing, because you dont have much products or services to buy with it. The reality is , recent politicians have been wasting money excessively, 50-60-70% of the tax revenue ends up being lost to corruption, inefficiencies, etc. One can continue promoting taxing more and more, it’ll just end up killing the golden goose. The problem is more with the oligarchic style of engagement between big corps and gov, its stifling innovation, making medicines 10000x more expensive than it needs to be, with extremely insane patents stifling competition and small startups defeating old barrons, a overly litigious society which is rampant in most western countries. We keep losing our free market, and thus losing prosperity of the middle class, and we keep blaming it on not taxing enough…
gyre007 2y ago
Europe being Europe. But more importantly, I find it a but strange the countries with growing deficits thinking that raising taxes is the right move towards improving the economic situation instead of restructuring
- Guthur 2y ago
  Because they gave up their monetary sovereignty they have very few options when it comes to funding.
- logifail 2y ago
  > I find it a but strange the countries with growing deficits thinking that raising taxes is the right move towards improving the economic situation instead of restructuring Speaking of restructuring, how about we restructure the way multinationals pay taxes in Europe? "Amazon pays no corporation tax in Europe despite €44bn sales" https://www.irishtimes.com/business/economy/amazon-pays-no-corporation-tax-in-europe-despite-44bn-sales-1.4554939 https://www.irishtimes.com/business/economy/amazon-pays-no-c... "Facebook UK pays £29m corporation tax despite record £3.3bn sales" https://www.theguardian.com/technology/2022/oct/06/facebook-uk-pays-29m-corporation-tax-despite-record-33bn-sales https://www.theguardian.com/technology/2022/oct/06/facebook-... "Microsoft’s Irish subsidiary posted £220bn profit in single year [..] An Irish subsidiary of Microsoft recorded a profit of $315bn (£222bn) last year [..] The profit generated by Microsoft Round Island One is equal to nearly three-quarters of Ireland’s gross domestic product – even though the company has no employees." https://www.theguardian.com/world/2021/jun/03/microsoft-irish-subsidiary-paid-zero-corporate-tax-on-220bn-profit-last-year https://www.theguardian.com/world/2021/jun/03/microsoft-iris...
  - lifestyleguru 2y ago
    > The companies paid $219bn in income tax, just 3.6% of their total revenue of more than $6tn Meantime dividend tax for an individual in Ireland is a brutal 51%. America is such a greedy leech on Europe's body.
    - CalRobert 2y ago
sva_ 2y ago
> Italy will also raise a tax on capital gains stemming from cryptocurrency such as Bitcoin to 42% from 26%, Leo added.
mathverse 2y ago
I am european and I think our countries are in a massive state of decline Slovakia introduced tax on digital financial transactions for next year. As a European I want OUT of this hellhole.
- lifestyleguru 2y ago
  So... crypto will be taxed the same as stocks? The pathology is that in Europe the only untaxed gains are on crypto and real estate (after some years of ownership usually). That's how you arrive to a pathetic state the EU is now dwelling in. Slovakia economically sits on the lap of German automotive. When you visit you see many luxury cars and prices of real estate in village of Bratislava are through the roof, weird isn't it?
  - brnt 2y ago
    Not all of Europe is like Slovakia... In NL, bitcoin gains are taxable and there is a real estate tax.
  - piva00 2y ago
    > The pathology is that in Europe the only untaxed gains are on crypto and real estate (after some years of ownership usually). Where in the developed world do you get untaxed gains on anything? Not even the USA has untaxed gains... Many loopholes if you are rich but you probably don't have access to those mechanisms.
    - lifestyleguru 2y ago
      In Poland you don't pay gains tax on real estate if you own longer than 5 years. If you own shorter than 5 years you can skip tax when buying another real estate right away. The prices increased 100% in the last 5 years. No limitations for foreigners. Please come buy and invest to make the bubble spectacular. People needing a place to live cannot afford anymore so it doesn't matter.
    - jsnell 2y ago
      Switzerland doesn't have capital gains tax, except for real estate.
jandrewrogers 2y ago
Revenue (not profit) taxes have a bad history and are generally abhorrent because they incentivize many suboptimal things both in theory and practice. Trying to impose this kind of tax on companies that have no meaningful presence in your jurisdiction, subjecting them to these perverse incentives, is going to invite significant backlash. Everything about this seems foolish and poorly thought out.
- mdrzn 2y ago
  Are you claiming that Google, Meta and Amazon don't have a meaningul presence in Italy? They're free to not serve their content there then.
  - jandrewrogers 2y ago
    The issue, which has been raised in diplomatic discussions on this matter, is that multiple countries are claiming the same revenue as “domestic” and wish to tax it simultaneously. This quickly becomes untenable and isn’t a good look for tax policy.
  - csomar 2y ago
    That's not the problem. You can't tax Google profit in Italy. It's an American company. You can apply sales tax and custom duties, however. This is what this "tax" is. But because of the WTO, they couldn't apply duties, so they are twisting the story. The WTO agreements and institutions are due to collapse in the next 2-4 years (and nope, am not saying that, see Macron latest interview about cars).
    - olabyne 2y ago
      i think you are confused. It's not about taxing an american company, it's more about taxing an irish company
      - tzs 2y ago
        America was only actually relevant to their point because it is not Italy. Ireland is also not Italy so their point works equally well with America replaces with Ireland.
technick 2y ago
It's a regressive tax that will only be paid by poor people. Rich people will have ways around it.
bell-cot 2y ago
The current HN Title bears zero-ish resemblance to the Reuters article title. And that article seems to assume a load of prior knowledge. SO - what is the fuss over here? Is Italy doing anything more than say "if you sell digital widgets into Italy, then you gotta pay Italian sales tax on that revenue"?
- kimi 2y ago
  Yes - "if you have Italians connecting to your website and look at ads, even if you make $0.01 total, you have to register and pay 3% of that, or else". This is already in effect for big corps like Google, but now it seems to be for everyone - therefore its presumed relevance to HN.
  - bell-cot 2y ago
    Is there some other (more basic, or longer) article where that is spelled out? Because I'd never have guessed it from Reuters' crappy coverage.
matco11 2y ago
I haven’t decided yet where I stand on this, however… …As I understand it, the intent of the law is to avoid that large companies book billions of revenues in the country, but then use price-transfer schemes to book the profits somewhere else, and not pay any taxes locally. The net effect of the law on larger internet companies is probably marginal, but I am not sure the law was designed well enough, so as to avoid collateral damage on smaller internet companies
- bwb 2y ago
  I thought this was what was being implemented to fix that -> https://en.wikipedia.org/wiki/Global_minimum_corporate_tax_rate https://en.wikipedia.org/wiki/Global_minimum_corporate_tax_r...
  - Xywzel 2y ago
    The way Italy is implementing their own law looks kinda like ultimatum for others to implement minimum corporate tax law. As was agreed, but then never done because China and US are arguing details and everyone knows last one to implement theirs is likely a winner economically.
  - maeil 2y ago
    You can sit around and wait for decades until this might get meaningfully implemented, loopholes get closed and enforcement is strict. Great step by Italy to refuse that and just implement a measure in the meantime. Can always be repealed if indeed things get fixed on a global level.
- kimi 2y ago
  Yes, but now it's for everybody.
deleted 2y ago
[deleted]
csomar 2y ago
https://archive.is/gyT8t https://archive.is/gyT8t
bryanrasmussen 2y ago
The original title is "Italy stiffens terms of digital services tax in 2025 budget", which totally fits the required HN length. HN suggests to stick as close as possible to the original title, which given that this title does not overrun the length would be exactly this title. Why is the title changed so much? I know we're supposed to assume good faith, but in some cases it is difficult.
- kimi 2y ago
  [flagged]
  - crtasm 2y ago
    You can do that in a comment after submitting it.
  - Dalewyn 2y ago
    That is explicitly not allowed in the HN Guidelines[1]. [1]: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
timwaagh 2y ago
Paying tax is normal for most companies. I am not sure why the us is being the slave of these companies and threatening retaliation. Apparently it wants to be the only one to take a cut (despite money being made from Italians). That's extreme. If NATO is a family of mobsters, then this is not how things are done within the family. I know we're not supposed to anger the us as they are the best guarantor for European security and freedom but such bullying tactics, effectively making Italy pay a tribute like a vassal state, does make me question whether we can be independent and guarantee such things ourselves.
Hypergraphe 2y ago
It is time for the Big Techs financial loopholes in Europe to end.
DataDaemon 2y ago
If you can't create innovation, just tax it.
stdbrouw 2y ago
This is mentioned in the article, but it's important to know that this is not just some Italian novelty, there has been a worldwide effort to figure out how to tax digital services provided by multinational companies in a way that makes sense and avoids funny business with transfer pricing and other tax loopholes, see https://en.wikipedia.org/wiki/Base_erosion_and_profit_shifting https://en.wikipedia.org/wiki/Base_erosion_and_profit_shifti.... The news here is primarily that Italy is not waiting on a big multilateral agreement but has started to implement some of these ideas on its own.

51 points by kimi 2y ago

seydor 2y ago

Success must have a price. Let's call it 'success tax'

idle_zealot 2y ago
It's called a progressive tax, and it's a great idea.
- jstanley 2y ago
  If taxing something discourages it, we should instead create a "failure tax", which you only pay if you don't make very much money, to discourage failure.
  - Terr_ 2y ago
    In that case, have a tax on tax, where the government takes 100% of it's own tax receipts, which should logically lead to no taxation at all, right? :p
    - teitoklien 2y ago
      There are taxes on tax too, its called “cess”, a lot of countries have that too -_- , so you pay taxes, and then there is an extra tax on the tax collected too.
  - unglaublich 2y ago
    A profit tax doesn't discourage increasing profit as long as the marginal gain is positive.
nhinck3 2y ago
Is it that different to any sale tax?
- newaccount74 2y ago
  The problem with "sales tax", or "value-added tax" in Europe, is that it applies only to consumers. Businesses can directly deduct any VAT that they pay from the VAT that they owe. If they pay more VAT than they owe, they can get it back. This means that Google, Meta, etc., who make almost all of their revenue from B2B transactions, effectively pay no VAT. The "digital services" tax changes that, by introducing a tax on those revenues.
  - victorbjorklund 2y ago
    "If they pay more VAT than they owe, they can get it back." Worth noting is that generally means the company has higher costs than revenues (not something you want).
    - newaccount74 2y ago
      Or if you have tax exempt revenue, like B2B sales to other countries.
      - victorbjorklund 2y ago
        That too
  - ninalanyon 2y ago
    > The problem with "sales tax", or "value-added tax" in Europe, is that it applies only to consumers. That's not quite correct. At each transaction you pay VAT on the margin, that's why it's called Value Added Tax. So if company B buys from company A and sells to company C then company B pays VAT on the difference between what it charges company C and what it paid company A.
high_na_euv 2y ago
Well, every gains tax is kind of success tax, aint it?
unglaublich 2y ago
Yes, if your success relies on a complex framework of infrastructure and societal services, then your success owes that infrastructure a share.
- teitoklien 2y ago
  That infrastructure does get its share, its called income taxes, sales taxes from products people buy, payroll taxes, mandatory employee provident fund contributions which governments use as their personal piggy bank in a lot of countries , and most importantly the product/service itself, good luck swimming in your pool of tax dollars, when that dollar is worth nothing, because you dont have much products or services to buy with it. The reality is , recent politicians have been wasting money excessively, 50-60-70% of the tax revenue ends up being lost to corruption, inefficiencies, etc. One can continue promoting taxing more and more, it’ll just end up killing the golden goose. The problem is more with the oligarchic style of engagement between big corps and gov, its stifling innovation, making medicines 10000x more expensive than it needs to be, with extremely insane patents stifling competition and small startups defeating old barrons, a overly litigious society which is rampant in most western countries. We keep losing our free market, and thus losing prosperity of the middle class, and we keep blaming it on not taxing enough…

gyre007 2y ago

Europe being Europe. But more importantly, I find it a but strange the countries with growing deficits thinking that raising taxes is the right move towards improving the economic situation instead of restructuring

Guthur 2y ago
Because they gave up their monetary sovereignty they have very few options when it comes to funding.
logifail 2y ago
> I find it a but strange the countries with growing deficits thinking that raising taxes is the right move towards improving the economic situation instead of restructuring Speaking of restructuring, how about we restructure the way multinationals pay taxes in Europe? "Amazon pays no corporation tax in Europe despite €44bn sales" https://www.irishtimes.com/business/economy/amazon-pays-no-corporation-tax-in-europe-despite-44bn-sales-1.4554939 https://www.irishtimes.com/business/economy/amazon-pays-no-c... "Facebook UK pays £29m corporation tax despite record £3.3bn sales" https://www.theguardian.com/technology/2022/oct/06/facebook-uk-pays-29m-corporation-tax-despite-record-33bn-sales https://www.theguardian.com/technology/2022/oct/06/facebook-... "Microsoft’s Irish subsidiary posted £220bn profit in single year [..] An Irish subsidiary of Microsoft recorded a profit of $315bn (£222bn) last year [..] The profit generated by Microsoft Round Island One is equal to nearly three-quarters of Ireland’s gross domestic product – even though the company has no employees." https://www.theguardian.com/world/2021/jun/03/microsoft-irish-subsidiary-paid-zero-corporate-tax-on-220bn-profit-last-year https://www.theguardian.com/world/2021/jun/03/microsoft-iris...
- lifestyleguru 2y ago
  > The companies paid $219bn in income tax, just 3.6% of their total revenue of more than $6tn Meantime dividend tax for an individual in Ireland is a brutal 51%. America is such a greedy leech on Europe's body.
  - CalRobert 2y ago

sva_ 2y ago

> Italy will also raise a tax on capital gains stemming from cryptocurrency such as Bitcoin to 42% from 26%, Leo added.

mathverse 2y ago

I am european and I think our countries are in a massive state of decline Slovakia introduced tax on digital financial transactions for next year. As a European I want OUT of this hellhole.

lifestyleguru 2y ago
So... crypto will be taxed the same as stocks? The pathology is that in Europe the only untaxed gains are on crypto and real estate (after some years of ownership usually). That's how you arrive to a pathetic state the EU is now dwelling in. Slovakia economically sits on the lap of German automotive. When you visit you see many luxury cars and prices of real estate in village of Bratislava are through the roof, weird isn't it?
- brnt 2y ago
  Not all of Europe is like Slovakia... In NL, bitcoin gains are taxable and there is a real estate tax.
- piva00 2y ago
  > The pathology is that in Europe the only untaxed gains are on crypto and real estate (after some years of ownership usually). Where in the developed world do you get untaxed gains on anything? Not even the USA has untaxed gains... Many loopholes if you are rich but you probably don't have access to those mechanisms.
  - lifestyleguru 2y ago
    In Poland you don't pay gains tax on real estate if you own longer than 5 years. If you own shorter than 5 years you can skip tax when buying another real estate right away. The prices increased 100% in the last 5 years. No limitations for foreigners. Please come buy and invest to make the bubble spectacular. People needing a place to live cannot afford anymore so it doesn't matter.
  - jsnell 2y ago
    Switzerland doesn't have capital gains tax, except for real estate.

jandrewrogers 2y ago

Revenue (not profit) taxes have a bad history and are generally abhorrent because they incentivize many suboptimal things both in theory and practice. Trying to impose this kind of tax on companies that have no meaningful presence in your jurisdiction, subjecting them to these perverse incentives, is going to invite significant backlash. Everything about this seems foolish and poorly thought out.

mdrzn 2y ago
Are you claiming that Google, Meta and Amazon don't have a meaningul presence in Italy? They're free to not serve their content there then.
- jandrewrogers 2y ago
  The issue, which has been raised in diplomatic discussions on this matter, is that multiple countries are claiming the same revenue as “domestic” and wish to tax it simultaneously. This quickly becomes untenable and isn’t a good look for tax policy.
- csomar 2y ago
  That's not the problem. You can't tax Google profit in Italy. It's an American company. You can apply sales tax and custom duties, however. This is what this "tax" is. But because of the WTO, they couldn't apply duties, so they are twisting the story. The WTO agreements and institutions are due to collapse in the next 2-4 years (and nope, am not saying that, see Macron latest interview about cars).
  - olabyne 2y ago
    i think you are confused. It's not about taxing an american company, it's more about taxing an irish company
    - tzs 2y ago
      America was only actually relevant to their point because it is not Italy. Ireland is also not Italy so their point works equally well with America replaces with Ireland.

technick 2y ago

It's a regressive tax that will only be paid by poor people. Rich people will have ways around it.

bell-cot 2y ago

The current HN Title bears zero-ish resemblance to the Reuters article title. And that article seems to assume a load of prior knowledge. SO - what is the fuss over here? Is Italy doing anything more than say "if you sell digital widgets into Italy, then you gotta pay Italian sales tax on that revenue"?

kimi 2y ago
Yes - "if you have Italians connecting to your website and look at ads, even if you make $0.01 total, you have to register and pay 3% of that, or else". This is already in effect for big corps like Google, but now it seems to be for everyone - therefore its presumed relevance to HN.
- bell-cot 2y ago
  Is there some other (more basic, or longer) article where that is spelled out? Because I'd never have guessed it from Reuters' crappy coverage.

matco11 2y ago

I haven’t decided yet where I stand on this, however… …As I understand it, the intent of the law is to avoid that large companies book billions of revenues in the country, but then use price-transfer schemes to book the profits somewhere else, and not pay any taxes locally. The net effect of the law on larger internet companies is probably marginal, but I am not sure the law was designed well enough, so as to avoid collateral damage on smaller internet companies

bwb 2y ago
I thought this was what was being implemented to fix that -> https://en.wikipedia.org/wiki/Global_minimum_corporate_tax_rate https://en.wikipedia.org/wiki/Global_minimum_corporate_tax_r...
- Xywzel 2y ago
  The way Italy is implementing their own law looks kinda like ultimatum for others to implement minimum corporate tax law. As was agreed, but then never done because China and US are arguing details and everyone knows last one to implement theirs is likely a winner economically.
- maeil 2y ago
  You can sit around and wait for decades until this might get meaningfully implemented, loopholes get closed and enforcement is strict. Great step by Italy to refuse that and just implement a measure in the meantime. Can always be repealed if indeed things get fixed on a global level.
kimi 2y ago
Yes, but now it's for everybody.

deleted 2y ago

[deleted]

csomar 2y ago

https://archive.is/gyT8t https://archive.is/gyT8t

bryanrasmussen 2y ago

The original title is "Italy stiffens terms of digital services tax in 2025 budget", which totally fits the required HN length. HN suggests to stick as close as possible to the original title, which given that this title does not overrun the length would be exactly this title. Why is the title changed so much? I know we're supposed to assume good faith, but in some cases it is difficult.

kimi 2y ago
[flagged]
- crtasm 2y ago
  You can do that in a comment after submitting it.
- Dalewyn 2y ago
  That is explicitly not allowed in the HN Guidelines[1]. [1]: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

timwaagh 2y ago

Paying tax is normal for most companies. I am not sure why the us is being the slave of these companies and threatening retaliation. Apparently it wants to be the only one to take a cut (despite money being made from Italians). That's extreme. If NATO is a family of mobsters, then this is not how things are done within the family. I know we're not supposed to anger the us as they are the best guarantor for European security and freedom but such bullying tactics, effectively making Italy pay a tribute like a vassal state, does make me question whether we can be independent and guarantee such things ourselves.

Hypergraphe 2y ago

It is time for the Big Techs financial loopholes in Europe to end.

DataDaemon 2y ago

If you can't create innovation, just tax it.

stdbrouw 2y ago

This is mentioned in the article, but it's important to know that this is not just some Italian novelty, there has been a worldwide effort to figure out how to tax digital services provided by multinational companies in a way that makes sense and avoids funny business with transfer pricing and other tax loopholes, see https://en.wikipedia.org/wiki/Base_erosion_and_profit_shifting https://en.wikipedia.org/wiki/Base_erosion_and_profit_shifti.... The news here is primarily that Italy is not waiting on a big multilateral agreement but has started to implement some of these ideas on its own.