Italy's Digital Services Tax Ruling No. 292/2026: What It Means for European E-Commerce Platforms
Q&A with Andrea Bravo (Managing Director, A&M Tax Italy STP Srl) and Matthias Luther (Managing Director, Indirect Tax, A&M Tax Germany)
Key Facts
- Case: Judgment No. 292/2026, Corte di Giustizia Tributaria di primo grado di Milano (Milan Tax Court, first instance).
- Date: January 22, 2026.
- Tax at Issue: Italy's 3% Digital Services Tax (DST), Law No. 145/2018.
- Outcome: Refund of more than €1.04 million in DST paid for 2020–2022, granted to an online fashion and design retailer.[1]
- Legal Basis: Article 1(37)(b), Law No. 145/2018 — DST applies to revenue from a "multilateral digital interface" enabling users to contact and interact with each other. (This provision has since been recodified, with effect from 2026/2027, into Italy's Testo Unico dei Tributi Erariali Minori, Legislative Decree No. 174/2024, Articles 62 et seq.)
- Status: Reported to be under appeal before the second-instance tax court for the Lombardy region, not yet final.
- Wider Relevance: Italy's DST statute and its "multilateral interface" concept, was itself modeled on the EU Commission's 2018 draft DST Directive, the same template several other EU member states used for their own digital services taxes. (The court's judgment does not cite the EU draft; its reasoning rests on the domestic statutory text and an economic-substance analysis of the facts.)
What Is the Milan Tax Court's Ruling on Italy's Digital Services Tax About?
Andrea Bravo: Judgment No. 292/2026 holds that Italy's DST does not apply to direct online sales when the platform operator acts as seller rather than as an intermediary, even when that same operator also runs a genuine marketplace on the same website. The Milan Tax Court granted an online retailer's claim for a refund of more than €1.04 million in DST paid for 2020 through 2022.
What Were the Facts of the Case?
Andrea Bravo: The retailer ran two sales models through one website. Under a marketplace model, third-party sellers transacted with customers and the retailer earned a commission; DST was paid on that revenue without dispute. Under a second model, based on an Italian consignment arrangement called a "contratto estimatorio," suppliers delivered goods without an immediate transfer of ownership. The retailer only acquired the goods, and contracted with the customer in its own name, only once an order was placed. The refund claim covered DST paid on that second revenue stream.
Why Had the Taxpayer Been Paying DST on the Consignment Sales in the First Place?
Andrea Bravo: This reflects how DST compliance generally developed in Italy after 2020, rather than a specific ruling that consignment sales were taxable. DST is self-assessed, the "multilateral interface" concept was new and untested, and the Revenue Agency's guidance, notably Circular No. 3/E of 2021, drew the intermediary/seller line in fairly broad terms. Many groups operating hybrid platforms took a conservative "pay first, revisit later" approach in the early years, a pattern broadly consistent with this case, though the specific reasoning behind this taxpayer's original position is not part of the public record. It should not be read as the tax authorities having formally endorsed DST on consignment sales; the statute simply left enough ambiguity that conservative self-assessment was the safer path.
Why Did the Italian Tax Authorities Not Respond to the Refund Claim?
Andrea Bravo: The taxpayer had to challenge a "deemed denial" (silenzio-rifiuto), a standard feature of Italian tax procedure in which administrative silence after a set period can be treated as an implicit denial and challenged in court. Unanswered refund claims are not unusual, DST or otherwise, and without direct insight into this file, the silence could reflect capacity constraints in the office handling DST refunds, a preference to let a first test case proceed through the courts before setting an administrative position, or an ordinary backlog. What is clear is that the Revenue Agency has generally taken a firm interpretive stance defending the DST tax base, which is consistent with litigating rather than settling early.
Why Did the Court Find the Consignment Sales Outside the Scope of DST?
Andrea Bravo: DST under Article 1(37)(b) of Law 145/2018 taxes revenue from a multilateral digital interface that allows users to contact and interact with each other. The court found no such interaction in the consignment sales, customers dealt exclusively with the retailer, which contracted in its own name. It confirmed this by examining the economics: the retailer bore the risk of customer non-payment and unsold inventory, and it set its own prices, subject only to terms suppliers negotiated to protect their brand reputation. That combination of inventory risk and pricing discretion made the retailer a seller, not an intermediary, for that revenue stream, even while it ran a genuine marketplace elsewhere on the same site.
What Role Did the EU's 2018 Draft Digital Services Tax Directive Play in the Ruling?
Andrea Bravo: It is worth being precise here: the judgment itself does not cite or discuss the EU Commission's 2018 draft directive. The court's reasoning stays entirely within the text of Article 1(37)(b) of Law 145/2018, applied through an economic-substance analysis of the facts, inventory risk, pricing power, and the absence of interaction between users. The EU connection is legislative history, not judicial reasoning: Italy's DST statute, including the "multilateral interface" concept the court applied, was modeled on the Commission's proposed DST Directive, COM(2018) 148, which failed in the Council due to the unanimity requirement and never became EU law. The court simply did not need to invoke that lineage to reach its conclusion, it worked directly from the domestic text.
What Happens Next in the Case?
Andrea Bravo: Published reports indicate that the Revenue Agency has appealed. I do not have direct confirmation of the filing myself, but that would be entirely consistent with the Agency's usual practice of appealing adverse first-instance DST rulings. On that basis, the case should now be before the second-instance tax court for the Lombardy region. Either way, this is a well-reasoned first-instance ruling, not yet a final precedent, so companies should track the appeal rather than treat the Milan decision as the last word.
Why Does an Italian First-Instance Ruling Matter for Companies Outside Italy?
Matthias Luther: Because the legal concept the Milan court interpreted did not originate in Italy; it derived from the European Commission's 2018 draft directive. That draft never became EU law, but it shaped the DST legislation several member states enacted unilaterally afterward. The test applied in Milan, whether there a genuine plurality of interacting users, who bears inventory risk, who controls pricing, is not an Italian peculiarity. It applies anywhere a DST built on the same 2018 template meets a business that runs both a marketplace and direct sales through one platform, which is an increasingly common model.
What Does the Stalled OECD Pillar One Mean for Digital Services Taxes Today?
Matthias Luther: Pillar One, the international framework intended to eventually replace unilateral digital taxes, is effectively stalled, with no clear implementation path. DSTs have not been phased out; they have spread, and their revenue keeps growing. Many companies managed DST with minimal resources on the assumption that Pillar One would render the category moot. Several years on, that assumption is getting more expensive to maintain.
What Should Companies Running Hybrid Marketplace/Direct-Sales Platforms Do Now?
Matthias Luther: Stop treating the platform as one single, undifferentiated revenue base for DST purposes. For each revenue stream, determine who carries the commercial risk, who controls pricing, and whether the platform genuinely connects multiple users or simply facilitates the company's own sales. Those factors determine DST exposure and, as this case shows, can also support a refund where DST was paid on revenue that does not actually meet the test. This ruling is a concrete, court-tested prompt to replace blanket compliance or blanket wait-and-see with a precise, defensible, revenue-stream-by-revenue-stream assessment.
To assess your own digital services tax exposure across marketplace and direct-sales revenue streams, contact Andrea Bravo or Matthias Luther at A&M Tax to discuss the ruling’s implication for your platform.
Sources:
