Italian lawmakers back 'Google tax' in 2014 budget

Dec 20, 2013
Italy's parliament approves a controversial law forcing tech giants like Google to sell advertising online only through Italian intermediaries, provoking anger from digital economy experts

Italy's parliament approved a controversial law on Friday forcing tech giants like Google to sell advertising online only through Italian intermediaries, provoking anger from digital economy experts.

The new law is part of the 2014 budget and is a watered-down version of a bill that would have imposed on all e-commerce activities in Italy and now applies only to the sale of advertising space.

The measure—dubbed "Google tax" or "web tax" by the Italian press—comes into force on January 1.

The measure is believed the first of its kind in Europe and could boost the tax bill for tech giants who currently sell advertising through intermediaries based in states with lower taxes like Ireland of Luxembourg.

"They will have to pay taxes in Italy on the advertising they sell in Italy," said the measure's chief proponent, Francesco Boccia, a lawmaker from the main centre-left Democratic Party.

"An Italian hotelier who buys online advertising will pay the same but the payment will go through a company that pays sales tax in Italy," he said.

He said the increased revenue could bring in between 100 million and 150 million euros ($137 million and $205 million) a year but the main benefit is that it would help keep track of what he said was a "financial haemorrhage" for the country.

"We suffer this without batting an eyelid," he said.

A woman tests a pair of Google glasses equiped with Italian Sign Language capabilities at the Egyptian Museum in Turin, on November 11, 2013

The European Commission has spoken of "serious doubts" about the measure, which could contravene rules on the single market and non-discrimination in Europe.

Prime Minister Enrico Letta said the new measure needs "co-ordination with European norms" but that it is important in making the issue a "priority" for Europe.

Critics from Italy's tech world have been vehement in their hostility.

Carlo Alberto Carnevale-Maffe, a lecturer in digital economy at Bocconi University in Milan, said Italian companies that want to buy space online would be particularly adversely affected.

"What are they thinking in parliament?" he told AFP, complaining that there had been no in-depth analysis of its impact or public consultation before approval.

A woman tests a pair of Google glasses equiped with Italian Sign Language capabilities at the Egyptian Museum in Turin, on November 11, 2013

"It fences in businesses in a digital enclosure. You cannot make the Internet territorial," he said.

"The ridiculous aspect is that it hurts small companies trying to export," he said, estimating that it would raise "at best dozens of millions of euros a year but will cost billions in terms of lost exports".

Wired magazine's Italian edition has also been highly critical, saying the measure will "damage" Italy.

"Italy's entire digital economy is affected," it said.

Explore further: Apple insists pays full share of taxes in Italy

add to favorites email to friend print save as pdf

Related Stories

Italian probe alleges Google underpaid tax

Nov 28, 2012

A probe by Italian tax authorities into US Internet giant Google's Italian arm has found it failed to declare income of 240 million euros ($310 million) and pay value added tax of 96 million euros.

Italian tax police raid Facebook offices

Dec 07, 2012

Italian police on Friday raided the Milan offices of US social media giant Facebook over possible violations of tax laws, Italian media reported.

'Apple investigated for Italy tax fraud'

Nov 13, 2013

Apple is under investigation in Italy for allegedly failing to declare over 1.0 billion euros ($1.34 billion) to the tax man, Italian media reported on Wednesday.

Google boss defends UK tax bill

Apr 22, 2013

A top Google executive on Monday insisted that the company's "key" role in developing Britain's electronic commerce sector should be taken into account in the row over its controversial tax arrangements.

Recommended for you

Chinese tech giant Alibaba set to make a splash with US IPO

11 hours ago

The largest tech IPO of the year will come from a company that many Americans have never heard of. Alibaba Group - a Chinese e-commerce behemoth - has decided to go public in the U.S. after months of speculation that it would ...

Ex-Apple chief plans mobile phone for India

Apr 19, 2014

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

Airbnb rental site raises $450 mn

Apr 19, 2014

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

not rated yet Dec 21, 2013
Ten years on the Italians will be wondering why Milan fashion houses missed out of the big bucks boom in designer Google glasses. A little bit of tax today, irrelevancy tomorrow.

More news stories

Growing app industry has developers racing to keep up

Smartphone application developers say they are challenged by the glut of apps as well as the need to update their software to keep up with evolving phone technology, making creative pricing strategies essential to finding ...

Easter morning delivery for space station

Space station astronauts got a special Easter treat: a cargo ship full of supplies. The shipment arrived Sunday morning via the SpaceX company's Dragon cargo capsule.