Italy and the United States have issued a joint statement opposing what they describe as “discriminatory” taxes on digital services, marking a notable shift in Italy’s approach to taxing major technology companies. The announcement follows recent meetings between Italian Prime Minister Giorgia Meloni and former U.S. President Donald Trump, who welcomed Meloni warmly and signaled a willingness to negotiate on digital tax issues. Italy’s current digital services tax, a 3% levy targeting tech giants, has long been a point of contention with the U.S., which argues that such measures unfairly target American firms.

The Italian digital tax, first introduced in 2019, applies to companies with global revenues exceeding €750 million and Italian revenues above €5.5 million. However, proposed changes to the 2025 budget could eliminate these thresholds, potentially subjecting all digital businesses operating in Italy to the tax. While the existing tax generates about €400 million annually, it remains a politically sensitive issue, with Meloni facing pressure from her coalition to increase taxes on big tech to support public finances.

Italy’s move to broaden the tax’s reach is partly aimed at addressing U.S. complaints of discrimination by including smaller digital firms, not just American tech giants like Meta, Google, and Amazon. This adjustment is intended to defuse threats of U.S. retaliation, such as tariffs on Italian exports, and to align Italy’s policy with broader international tax reform efforts. Economy Minister Giancarlo Giorgetti has emphasized the need to avoid unilateral approaches that could create tensions and discourage investment.

Despite these diplomatic efforts, the debate over digital taxation remains complex. U.S. officials have previously threatened tariffs in response to unilateral digital taxes, and the future of Italy’s digital services tax is closely linked to ongoing global negotiations over a coordinated minimum tax framework. The outcome will shape both transatlantic relations and the future tax landscape for digital businesses in Italy and beyond.