Digital Services Tax (DST): When Online Sales Are Not Subject to the Web Tax

The Digital Services Tax (DST), also known in Italy as the Imposta sui Servizi Digitali (ISD) or, more simply, the Web Tax, is one of the instruments through which the Italian legislature has sought to tax certain business models of the digital economy, in which economic value derives to a significant extent from user interaction through online platforms.

Although the tax has been in force since 2020, judicial precedents are still rather limited. Particular importance therefore attaches to Judgment No. 292/1/26 of 22 January 2026 of the Milan First-Instance Tax Court (Corte di Giustizia Tributaria di primo grado di Milano), which addresses one of the main interpretative issues arising under the relevant legislation: the distinction between digital intermediation activities, which are subject to the tax, and the direct online sale of goods, which is instead excluded from its scope.

The judgment provides important guidance for e-commerce operators and all groups developing digital business models.

1. What Is the Digital Services Tax?

The DST is governed by Article 1, paragraphs 35 et seq., of Law No. 145/2018 and applies at a rate of 3% to taxable revenues deriving from specific digital services. As of 1 January 2027, the relevant rules will be incorporated into the Consolidated Act on Minor State Taxes (Testo unico dei tributi erariali minori, Legislative Decree No. 174/2024), without, however, any substantial changes to the structure of the tax.

The DST applies exclusively to entities that, individually or at group level, generated total revenues of at least EUR 750 million in the previous year and derive revenues from digital services in the territory of the State. The rules also apply to non-resident companies, irrespective of the existence of a permanent establishment in Italy.

Taxable digital services fall into three categories:

• the placement of targeted advertising through digital interfaces;

• the making available of a multi-sided digital interface that allows users to contact and interact with one another, including for the purpose of facilitating the supply of goods or services;

• the transmission, for consideration, of data collected from users through a digital interface.

A common element of these activities is the fact that economic value derives from the contribution made by users to the digital platform. Precisely for this reason, the legislation expressly excludes from the scope of the tax the direct supply of goods or services where the website simply constitutes the channel through which the supplier markets its products, without performing an intermediation function between different parties.

2. The Case: One Platform, Two Business Models

The dispute originated from a refund claim submitted by a company engaged in the online sale of fashion products, which had paid DST for the 2020, 2021 and 2022 tax years.

The most interesting aspect is that the company used the same website to carry out two different activities. On the one hand, it operated as a marketplace, bringing third-party sellers into contact with final customers and receiving a commission for the intermediation service. The company had correctly paid DST on those revenues.

At the same time, the platform was also used for the sale of goods under consignment agreements. Under this model, the customer purchased directly from the company, which determined the sale price, entered into the contract with the final customer and assumed the economic risk of the transaction. According to the taxpayer, those revenues did not derive from the provision of a taxable digital service, but rather from an ordinary commercial activity, with the consequent right to a refund of the tax paid.

3. The Decision of the Milan First-Instance Tax Court: What Matters Is the Economic Function of the Platform

The Milan First-Instance Tax Court upheld the appeal, establishing a principle that is likely to be of particular importance in the interpretation of the DST. According to the judges, the objective requirement laid down in Article 1, paragraph 37(b), of Law No. 145/2018 requires the platform actually to make available to users a multi-sided digital interface, namely a tool that enables multiple users to contact and interact with one another.

In the case under consideration, this requirement was absent. The final customer interacted neither with the supplier of the goods nor with other users of the platform, but exclusively with the claimant company, which directly entered into the sales contract. The website therefore represented merely the channel through which the company marketed its products and not a tool intended to facilitate the matching of supply and demand.

The Court also gave particular weight to the economic substance of the transaction, highlighting that the company:

• entered directly into the contract with the final customer;

• determined the sale price of the products;

• assumed the commercial risk and the risk of non-payment;

• acted as a seller and not as a mere intermediary.

These elements are incompatible with the typical function of an intermediation platform and confirm that, in the case at issue, the activity carried out was attributable to the direct sale of goods rather than to the provision of a taxable digital service.

The judgment thus confirms that, for DST purposes, the economic function actually performed by the platform prevails over its technological or formal configuration.

4. The Same Website May Carry Out Activities That Are Subject and Not Subject to DST

One of the most significant aspects of the decision is the recognition that the same digital platform may simultaneously generate taxable revenues and revenues excluded from the scope of the DST.

In the case under consideration:

• the marketplace activity remained subject to the tax, since it facilitated transactions between sellers and buyers;

• the direct sales carried out by the company under the consignment agreements were instead excluded, since there was no intermediation function between users.

The tax classification must therefore be carried out by separately analysing the different revenue streams, without automatically applying the same treatment to the entire activity conducted through a digital platform.

5. What Changes for Businesses?

The judgment provides practical guidance of particular interest to operators in the digital economy. Businesses operating through online platforms should verify, among other things:

• whether the platform performs a genuine intermediation function or directly sells goods or services;

• who enters into the contract with the final customer;

• who determines the price of the goods or services;

• who assumes the commercial risk of the transaction;

• whether different business models coexist within the same platform.

The analysis of these elements may affect not only the correct application of DST in the future, but also the possible assessment of refund claims where part of the revenues has been subjected to the tax in the absence of the relevant requirements.

Conclusions

The judgment of the Milan First-Instance Tax Court represents one of the first important Italian precedents concerning DST and contributes to defining more clearly the objective requirement of the tax in question.

The principle expressed by the judges appears likely to be relevant beyond the specific case: the mere presence of a digital platform does not, in itself, entail the application of the Web Tax.

What matters is the economic function actually performed by the platform. If the platform genuinely brings multiple users into contact with one another, facilitating transactions between different parties, the requirement of a multi-sided digital interface laid down by the legislation is met.

If, on the other hand, the company uses its website exclusively as a channel to sell goods or services directly to final customers, assuming the related risks and responsibilities, the activity may remain outside the scope of the DST.

The judgment therefore constitutes an important point of reference for businesses operating in the digital economy, which are called upon to reassess their business models in light of an approach that gives priority to the economic substance of transactions over their mere technological configuration.

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Does your business operate in the digital economy? Do you manage a marketplace or an e-commerce platform and want to verify the correct tax treatment of your revenues for Digital Services Tax (DST) purposes?

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RCLex’s International Desk is ready to support you by providing the specialist expertise developed by the Firm in tax and legal matters, as well as an established network of professionals and foreign law firms across the relevant jurisdictions.

📌 For a general description of the Desk’s approach and activities: https://www.rclex.it/en/internationaldesk