Italy’s Tax Authority (ITA) has issued Tax Ruling No. 6/2025 (the “Ruling”), clarifying the method for determining the tax base of the Digital Services Tax (DST) in the online gaming and gambling sector. This Ruling resolves a long-standing industry debate on whether the tax base should be the gross revenue or the revenue net of prizes paid to players and net winnings.

Overview of the Digital Services Tax (DST)

Italy’s DST is a 3% tax applied to certain digital service revenues and applies to “taxable entities” that meet the following criteria:

• Generate revenue from digital services within Italy

• Have global gross revenues of at least €750 million in the calendar year prior to the taxable income year, either individually or on a consolidated group basis

Notably, as of January 1, 2025, the previous “double threshold” requirement is no longer applicable.

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 multi-sided platforms that enable user interaction

• Transferring data collected from users and data generated through user interactions with digital interfaces

This Ruling specifically focuses on digital multi-sided platforms used for online gaming and gambling.

Determining the Tax Base for Online Gaming and Gambling

The Ruling clearly addresses the core controversy within the sector: when calculating the DST tax base, platform operators acting as intermediaries should only include platform commissions as taxable revenue and exclude total player bets. Specifically:

• Total bets: explicitly excluded from the DST tax base

• Player winnings: must be deducted from the tax base, even if winnings exceed bets in individual tournaments

• Player bonuses: bonuses offered to attract players are also deducted as they do not constitute actual payments or compensation to the platform

This interpretation is based on Article 1(37) of the 2019 Budget Law, Articles 3.1 and 3.6 of Implementing Decree No. 15185/2021, and clarification provided in Section 4.2 of Notice No. 3/E/2021.

Industry Impact and Compliance Recommendations

KPMG experts highlight that determining the tax base is among the most complex DST issues, especially for businesses with complex operations or multiple intermediaries in the value chain. The new Ruling provides the following key insights:

• Clear risk allocation: platform operators as intermediaries bear no risk related to user activities and only act as technical interfaces

• Review of past filings: companies should reassess the accuracy of prior DST filings to avoid overestimation of the tax base

• Future compliance adjustments: tax calculation methods should be updated accordingly to comply with the new rules

  
  

Conclusion

The issuance of this Ruling by the Italian Tax Authority brings much-needed clarity to the application of DST in the online gaming and gambling sector, resolving long-standing disputes about the scope of the tax base. Industry players should:

• Immediately review the compliance of their current tax calculation methods

• Adjust accounting systems and reporting processes as necessary

• Consider seeking professional tax advisory support to ensure full compliance with the new requirements

As the digital economy rapidly evolves, tax rules on digital services are also continuously developing. Italy’s targeted guidance on this specific sector reflects the tax authority’s deepening understanding of emerging business models 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 will not only reduce tax risks but may also enable reasonable tax savings through optimized tax base calculations.