Italy Reconsiders Digital Services Tax as US Tech Pressure Mounts

Italy and the United States issued a joint statement on Friday rejecting “discriminatory” digital services taxes, signaling a possible change in Italy’s approach to a contentious levy that has long been a point of friction between Rome and Washington, according to Reuters.

The declaration followed a high-profile visit to Washington by Italian Prime Minister Giorgia Meloni, who met with former U.S. President Donald Trump and his running mate JD Vance. Per Reuters, Meloni received an especially cordial reception from Trump, contrasting with the colder treatment other European leaders have faced in recent transatlantic encounters.

The statement, released after Meloni’s White House meetings, emphasized the need for a “non-discriminatory environment” regarding digital services taxation to foster tech sector investment. While the language suggests alignment between the two nations on the issue, the statement did not explicitly confirm whether Italy intends to repeal its existing digital tax.

Italy currently imposes a 3% tax on revenues from digital services provided by large technology companies—those with global sales exceeding €750 million (approximately $853 million). Although the tax brings in less than €500 million annually, a modest sum in the context of Italy’s over €800 billion in total government spending, it remains a politically sensitive matter.

As RReuters reports, European digital taxes—seen as targeting dominant U.S. tech firms like Google (Alphabet), Facebook (Meta), Apple, and Amazon—have irritated successive U.S. administrations, including Trump’s. The recent joint statement could indicate a thaw in relations over the issue.

Read more: Berlin Opposes EU Move to Tax US Big Tech as Trade Tensions Rise

Domestic political pressures complicate the picture for Meloni. Elements within her ruling coalition are pushing to maintain or even expand taxes on multinational tech firms as a way to raise revenue without exacerbating Italy’s fragile fiscal position. According to Reuters, political insiders say Meloni must balance American diplomatic expectations with internal demands for increased contributions from tech giants.

Meanwhile, Italian Economy Minister Giancarlo Giorgetti emphasized that negotiations with the U.S. over tech taxation should occur on a bilateral basis, rather than through broader EU channels. Giorgetti is expected to meet U.S. Treasury Secretary Scott Bessent next week during a G20 summit.

The joint statement also highlighted ongoing cooperation in digital infrastructure, welcoming U.S. investments in artificial intelligence and cloud computing initiatives in Italy. These efforts aim to position Italy as a strategic data hub for the Mediterranean and North African regions.

Amazon Web Services (AWS) has already committed to investing €1.2 billion in Italy over five years to expand its data center footprint, a move that underscores the potential for deepening economic ties beyond the tax dispute.

Source: Reuters