Google passes on 2% “Regulatory Operating Cost” for ads served in India and Italy

Beginning on October 1, 2021, Google will include a 2% “Regulatory Operating Cost” surcharge to advertisers’ invoices for ads served in India and Italy, according to an email sent to Google advertisers on Tuesday. The surcharge applies to ads purchased through Google Ads and for YouTube placements purchased on a reservation basis.

Why we care

Google was already passing on digital service taxes to advertisers for ads served in Austria, Turkey, the UK, France and Spain. Beginning in October, it will be doing the same for ads served in India and Italy.

Advertisers should be aware that these fees are charged in addition to their account budgets. As such, the surcharges won’t be reflected in the cost per conversion metrics in their campaign reporting. Advertisers should take these factors into account when creating their budgets.

Additionally, as Greg Finn, partner at digital agency Cypress North, advised on Twitter when Google first announced that it was passing on this surcharge last year, applying the “People in or regularly in your targeted locations” setting can result in racking up more surcharges.

More on the news

• Google will add the surcharges to advertisers’ Google Ads costs at the end of each month, to be paid the next time they are charged. The surcharges are subject to any taxes, such as sales tax, VAT, GST or QST that apply in the advertiser’s jurisdiction.
• Google is not the only platform passing off its costs. Amazon has passed on similar fees to third-party sellers and Apple has also implemented a similar policy for developers.
• In March, Maryland became the first state in the U.S. to impose a tax on digital advertising.