Italy Clarifies Digital Tax Rules for Online Gaming

The Italian Tax Authority released guidelines explaining how to determine the tax base for the 3% Digital Services Tax (DST) to the online gaming and betting industry. On June 3, 2025, the Tax Authority published Tax Law Principle (TLP) No. 6/2025, which provides all relevant data for guidance on how taxable persons from the respective industries should apply the DST.

DST Rules for Gaming and Betting Companies

The main issues relating to the application of the DST for gaming and betting companies were determining which tax base to use. There were two possible options. The first option was to use gross revenue as the tax base. In contrast, the second option was to use net revenue, net of bonuses paid to players and net of total winnings, even when the winnings exceed the stakes collected from players in a single event.

The Italian Tax Authority stated that the DST applies to platforms operating as intermediaries or multilateral digital interfaces that do not bear risk themselves but facilitate bets between users. Therefore, instead of taxing the total bets placed, the Tax Authority underlined that only the net margin retained by the platform is subject to DST.

This means that the formula used for determining the tax base is gross stakes minus player winnings and the gambling tax. By applying the formula, the Tax Authority took the ground that the platform's actual margin is the focus.

What is also crucial for companies operating in these sectors is that bonuses granted to players, such as welcome offers or free plays, are excluded from the DST base. The main reason for this is that they do not constitute actual revenue earned by the operator. Therefore, in scope platforms should subtract these bonuses from their gross gaming revenue before applying the DST.

Conclusion

With the recently published guidelines, the Italian Tax Authority underlined that only the actual retained commission forms the taxable base, and that total stakes, winnings, or player bonuses are not counted. 

Considering that determining the tax base is one of the most challenging DST-related matters, the guidance provides necessary clarification to the gaming and betting industry, which is one of the more complex business models.

Source: KPMG, Tax Law Principle (TLP) No. 6/2025