Italy to boost digital services tax in 2025 budget Italy is to expand its Digital Services Tax (DST) as part of its 2025 budget, with the aim of significantly increasing government revenue. 

The proposed changes will remove the current minimum thresholds that digital companies must meet to be subject to the 3% tax on revenues from digital transactions. Currently, this tax only applies to companies with a global turnover of more than €750 million and a turnover in Italy of at least €5.5 million. By removing these conditions, the Italian government aims to broaden the tax base and increase revenue collection. While specific revenue projections have not been released, officials expect a significant increase in funds from this measure. 

However, the move could provoke reactions from the United States, which has previously threatened to impose tariffs on European countries that introduce unilateral digital taxes. The US has expressed concerns about Italy’s DST, seeing it as a potential trade barrier. The decision comes amid stalled international efforts to reform digital taxation through the OECD’s Pillar 1 project, which seeks a coordinated approach to taxing multinational digital companies. Italy had initially planned to abolish its DST in line with the expected global framework, but has opted for a more aggressive stance in light of the ongoing delays.

 In addition to the DST changes, the Italian government also plans to increase the tax on capital gains from cryptocurrencies from 26% to 42% and modify tax breaks for families and businesses, with the aim of raising an additional €1 billion. The proposed measures will be submitted to parliament as part of the 2025 budget law, with implementation expected next year. The move reflects Italy’s determination to raise more revenue while navigating complex international tax issues.