On 17 September 2026, the Italian Revenue Agency issued Ruling No. 175/2026 clarifying the VAT treatment of “private cage” services within data centers. The ruling establishes that when a client obtains exclusive use of a physically delimited space within an Italian data center along with ancillary services such as power supply, cooling, interconnection, and security, the transaction qualifies as a real estate service for VAT territoriality purposes. Consequently, the operation is not exempt from VAT, and the place of taxation is determined by the location of the immovable property. This interpretation aligns with the principle that the physical location of the server infrastructure drives the territoriality of the supply, overriding any characterization as a purely electronic service.
Key Takeaways
- VAT Territoriality: The physical location of the server cage determines the place of supply for VAT, aligning with real estate rules and ensuring that Italian VAT applies to foreign clients using Italian data center space.
- No VAT Exemption: The bundled ancillary services do not qualify for VAT exemption; the entire package is taxable, meaning providers must charge Italian VAT on the full consideration.
- Compliance Impact: Data center operators and clients must adjust invoicing and reporting to reflect the taxable nature of private cage arrangements, including proper VAT registration and reporting obligations for non-resident suppliers.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement