Italy delays "Google tax" until July

Italy delayed the start of its planned Internet tax until July 2014, approved billions of euros in business and welfare measures and extended a ban on media cross-ownership in a final package of year-end legislation approved on Friday.

The launch of an Internet tax, sometimes dubbed the "Google tax", passed this week by parliament, will be postponed until July, 1, 2014, Prime Minister Enrico Letta's office said in a statement. The delay should ensure it can be more closely coordinated with other European countries.

(Also see: Italy revises proposed 'Google tax' legislation, excludes goods purchased online)

The tax, designed to ensure that companies that advertise and sell online in Italy do so only through companies with a tax presence in the country, has been criticized by the European Commission, which expressed doubts on its legality before it was approved in parliament.

The delay was contained in the so-called "Milleproroghe" ("thousand extensions"), a catch-all decree used by Italian governments to pack in miscellaneous pieces of legislation that must be approved before the start of the new year.

The package announced after Friday's cabinet meeting included measures to allow Italy to use 6.2 billion euros in European Union funds, which have already been approved, to help small businesses, fight youth unemployment and help local economies by funding the maintenance of historic sites.

It also extended provisions, which would have otherwise expired, forbidding newspaper publishers from operating national broadcasters. This is a highly sensitive political issue given centre-right leader Silvio Berlusconi's extensive television interests.

The package also contained measures to shore up the finances of the city of Rome and allow the cancellation of a number of expensive rental contracts on buildings used by parliament and the public service, an issue on which the government has been attacked by the opposition 5-Star Movement.

© Thomson Reuters 2013