What is DST and What Does It Mean For Your Marketing Efforts?

For those living in Austria, France, India, Italy, Spain, Turkey, and the United Kingdom, your marketing efforts will remain unchanged, as DST is already in effect in these countries. As of October 1st, 2024, Canada will be added to the list of countries that Google is applying DST to. 

As many of our clients target their ads in Canada, we want to advise about upcoming charges, regulated by the Canadian government for Google Ads effective October 1st, 2024.

For those unfamiliar with DST, read on to learn about what this is and what it could mean for your marketing efforts and budget.

Jurisdiction-Specific Surcharges

For years, Google has applied a Digital Service Tax (DST) fee for any ads served in specific jurisdictions worldwide such as Austria, France, India, Italy, Spain, Turkey, and the United Kingdom. As of October 1st, 2024, Canada will be added to this list.

These surcharges, often related to regulatory operating costs, apply irrespective of where your business is physically located. Each jurisdiction may have its own set of surcharges to cover the cost of doing business when ads are served within its borders.

For detailed information on jurisdiction-specific surcharges, including how they may affect your advertising costs, please consult the information provided by Google Ads. This proactive approach helps to align with global regulatory frameworks and ensures that your advertising campaigns continue to meet compliance standards.

A Specific Focus on the Canadian Market

As many ATRIUM clients focus their advertising efforts on the Canadian market, understanding this local regulatory change is crucial.

Commencing October 1st, 2024, Google will be applying a 2.5% Canada DST fee for any ads served in Canada. This fee helps Google to cover a portion of the 3% DST cost mandated by the Canadian Government to comply with the new Digital Services Tax legislation proposed in 2020. This regulation aims to ensure fair taxation of digital services provided by foreign companies operating in Canada.

The Canadian Government’s 3% DST, approved at the end of June 2024, targets revenues generated by multinational tech companies from various sources. This includes online marketplaces, social media platforms, the sale and licensing of user data, and online advertising. To be liable for this tax, a tech company must have annual digital services revenue of at least $20 million in Canada. Whether a targeted user is located in or outside of Canada would be determined on data, including data such as shipping addresses, phone number area codes, global satellite positioning, and more. This data is calculated over a period of time to exclude users who are visiting Canada.

Should you have any questions or require further clarification regarding these upcoming changes, please do not hesitate to contact us directly. We are here to assist you every step of the way.

Sources:

Digital Services Tax, Government of Canada

Jurisdiction-specific surcharges, Google Support

FAQ

• Does this apply to all Google Ad types?

• • • Yes. This would apply to all Google ad types including Google PPC, Shopping, Display, Remarketing, and YouTube Ads.

• What if I am a Canadian Business targeting ads in another country?

• • • DST fees apply when targeting ads in many countries. To see if a DST fee applies in a specific jurisdiction, please reference the provided Google source and choose your targeted country.

• What if I have Ads operating in multiple countries such as Canada and the USA?

• • • Only Advertising Spend targeting countries that Google is charging a DST fee will apply.

• Does this only apply to Google Managed Advertising platforms?

• • • As of when this article was published (August 2024), yes. Other platforms, such as Meta and X (formerly Twitter), have not yet implemented a DST fee or similar.

• How do I avoid Google Jurisdiction-specific fees?

• • If your ads target any of the listed countries, the fee is unavoidable. Google Ads will automatically apply the surcharge for traffic costs from these countries, and it will appear as a separate line item on your invoice at the end of each month.