Selling digital products is becoming a more appealing option for anyone looking to launch an e-commerce business. Software, music and podcasts, online courses, and e-books are examples of digital products that can make money without the high logistics costs of physical items. This article explains digital products, how to pick the right ones to sell when starting your online business, and which rules you must follow in Italy.

What’s in this article?

• What are digital products?
  
• Why sell digital products online?
  
• Disadvantages of selling digital products
  
• How to sell digital products in Italy
  
• How to choose digital products to sell online
  
• Where to sell digital products
  
• Regulations for producers and sellers of digital products in Italy
  

What are digital products?

Customers typically receive digital products through direct download, an app, or email, as these items exist solely in electronic form. They include a wide range of easily scalable offerings that generate high profits without requiring ongoing production or complex logistics. Some examples include:

• E-books
  
• Music and podcasts
  
• Software and applications
  
• Online courses or tutorials
  
• Digital models and templates
  
• Digital photographs and illustrations
  

Differences between digital and physical products

Unlike intangible items, tangible ones can be touched, handled, and require shipping and in-person delivery. Still, both types share similarities – for instance, they can be bought through e-commerce platforms and online marketplaces. Also, in both cases, the buyer can gain ownership of the product –whether it’s a physical item, a downloadable digital file, or a subscription that gives access to specific content for a set time.

Why sell digital products online?

Compared to physical products, digital ones have features that make them especially appealing to people looking to start an online venture:

• Lower overheads
  There’s no need to pay for production, storage, or shipping, and you don’t have to manage inventory – this all adds to significant savings on business expenses.

• Passive income
  Create these products once, and they can continue earning money each time they’re sold. This allows you to make income with minimal or no continuous effort.

• Higher profit margins
  Not having ongoing costs for handling items means you can keep most of the sale as profit.

• Scalability
  Digital products can be copied and shared with almost unlimited users without increasing expenses.

• Global distribution
  With the internet, a digital product can reach users worldwide without needing physical production or complicated logistics.

Disadvantages of selling digital products

Selling digital products online also comes with challenges:

• Strong competition
  Starting an online business selling digital products is relatively straightforward and affordable, so you need to figure out how to stand out.

• Competition with free content
  Customers often have access to free versions of your product or service. Show users why your offerings are worth the price and what makes them valuable – showcase your skills and experience, share positive testimonials, and offer options such as customising your product to match the customer’s wants better.

• Piracy
  Tangible items can also be counterfeited, but doing so is usually more costly and complicated. Electronic items are easier to copy and share, so use measures such as file encryption to prevent unauthorised copying of digital products – or consider registering your trademark or using copyright to protect your work.

Overview of the advantages and disadvantages of selling digital products

How to sell digital products in Italy

To legally and effectively start a digital product operation in Italy, you must follow a few basic steps. From signing up for taxes to sending electronic invoices, understanding the legal and tax rules is key to avoiding fines and running your business smoothly.

• Obtain a VAT number
  First, you might be wondering: do I need a value-added tax (VAT) number to sell digital products? You can offer such items without one only if it’s a one-time or occasional activity and you’re using third-party platforms (such as marketplaces) instead of selling directly. Still, you must always obtain a VAT number if you create your online store. To do so, register under ATECO code 47.91.10 (retail sale of all products on the web). You can do this through the Italian Revenue Agency (Agenzia delle Entrate) or get help from an accountant.

• Check the VAT rate for digital products
  In Italy, digital goods are usually taxed at a 22% VAT rate. Some, such as digital publishing products, might qualify for reduced rates. According to European Union VAT rules, sellers must charge VAT based on the buyer’s country of residence.

• Enrol in the Company Register and submit the SCIA
  Regularly selling electronic items is considered a genuine commercial activity, so it requires enrolling with the Company Register and submitting the Certified Notification of Business Commencement (SCIA) to the local municipality’s One-Stop Business Advisory Centre (SUAP). In specific situations, such as distributing copyrighted material, registering with the Italian Society of Authors and Publishers (SIAE) could be required.

• Select the tax regime
  Choosing the proper tax system is an integral part of the process. The flat-rate regime (regime forfettario) is a good choice for those earning under €85,000 a year and with low operation costs, as it offers a 15% flat tax rate (reduced to 5% for the first five years). Exceed that limit, and you automatically shift to the ordinary regime with progressive personal income taxes (IRPEF) and deductible VAT. Consult an accountant to pick the choice that best fits your situation.

How to choose digital products to sell online

After preparing all the paperwork to launch your business, the next step is deciding which digital products you want to sell online. Key factors include:

• Carry out market research
  Study the market before creating or selling a digital product. What products do other websites offer? Who is the target audience? What pricing structures do they offer? Identify industry trends, customer demand, and gaps in the sector.

• Take your experience and personal skills into account
  Think about your past work and personal experiences – selling something that matches your skills or interests can make creating and promoting the product easier. A photography expert could create video tutorials on advanced shooting techniques, while a graphic designer might offer template packs or curated visual assets.

• Get an idea of the profit margins and scalability
  While production costs are low, review potential returns and growth. For instance, a well-made online course can be sold repeatedly without extra costs, unlike products needing regular updates.

• Focus on growth sectors and evergreen products
  Fields such as e-learning, digital marketing, productivity tools, and graphic design are growing fast. Evergreen offerings – courses, e-books, templates, software – help ensure steady demand and lowers the risk of them becoming outdated quickly.

What are the best-selling digital products?

A study by the Digital Innovation Observatories of the Polytechnic University of Milan found that Italian consumers spent €3.7 billion on digital content in 2024, up about €200 million from the year before. The best-selling segments were:

• Video entertainment: €1.7 billion, or about 45% of total spending
  
• Gaming: More than €1.5 billion, 39% of total spending
  
• Digital audio (music, audiobooks, podcasts): €380 million, 10% of total spending
  
• Digital publishing (news and e-books): More than €180 million, about 5% of total spending
  

Where to sell digital products

There are three main channels for selling digital products: proprietary online stores, digital marketplaces, and social media. Let’s have a better look at these options:

Proprietary online stores

Building your online store gives you complete control over pricing, branding, and marketing. The main benefits are no sales fees (aside from hosting and management costs) and the chance to create a strong, recognisable brand. Running a shop alone can take more technical know-how for SEO, site security, and setting up checkout systems. Also, bringing in customers and the marketing strategies you choose to use is entirely up to you.

If you’re planning to start a digital product venture, another major factor to think about is choosing a payment service provider. Picking the right one is significant for managing transactions quickly and efficiently while offering the payment methods that best fit your type of business. With its Optimized Checkout Suite, solutions such as Stripe Payments lets you accept payments globally, both online and in person, boost conversion rates, and ensure compliance, potentially saving thousands of hours of technical work.

Marketplaces

Marketplaces can appear as the easiest and quickest choice: the infrastructure is ready, and visibility is built in to sell your digital products online. But this option has drawbacks, including platforms taking a cut of your profits – sometimes a large one – and giving a third party partial control over how your items are sold. Still, it can be a smart choice if you’re starting and don’t have the experience or budget to build your ecommerce site.

Social media

Social media lets you sell digital products directly (without a website) or through links to your online store. The biggest benefit is the low entry cost and the chance to use viral content to boost visibility. That said, keep in mind that your sales will largely depend on engagement and building a community, which takes time and a solid content marketing strategy.

Regulations for producers and sellers of digital products in Italy

Selling digital products in Italy means complying with a detailed set of regulations safeguarding buyers and sellers. These rules cover consumer rights, intellectual property, invoicing, VAT jurisdictions, and licensing agreements.

Consumer protection and right of withdrawal

Italian shoppers who buy digital products online are protected by the Consumer Code (Legislative Decree 206/2005) and Directive 2011/83/EU on consumer rights. It’s important to note that there are some exceptions compared to physical goods, such as those related to the right of withdrawal. In e-commerce, customers typically have a 14-day withdrawal right, allowing them to change their minds and cancel the contract within that time. For contracts involving digital content provided through a non-physical medium, the right to withdraw is excluded if the process has started with the consumer’s explicit consent and has acknowledged that they will lose the right to cancel in this case. It’s also important to inform the buyer that a refund might not be possible once the purchase is made and the process starts. Additionally, you have to provide thorough descriptions and clear terms of use and ensure the digital product meets expectations.

Intellectual property and copyright

E-books, online courses, software, templates, and music fall under copyright law (Law 633/1941). This means anyone creating and selling a digital product must have the rights to do so or, if reselling, needs to have the proper licences. Using protected works without permission can lead to legal consequences, including fines and civil lawsuits. To safeguard your items, you can take steps such as registering with the SIAE, using digital rights management, and clearly outlining terms of use in sales or user license agreements.

Invoicing and VAT jurisdictions

The sale of digital products is considered direct e-commerce. You don’t need to issue an invoice for direct business-to-consumer (B2C) ecommerce invoicing unless a buyer specifically requests it. Likewise, you don’t need to provide a sales or tax receipt. Still, it is important to record your sales figures daily in the register required by Article 24 of Presidential Decree No. 633/1972, as this is needed to calculate the VAT owed.

For business-to-business (B2B) ecommerce, however, you always need to invoice.

When selling digital services via ecommerce, B2B and B2C transactions are subject to VAT in the country where the customer is located, regardless of where the seller is (an EU or a non-EU country).

The difference between B2B and B2C sales is only meaningful for how VAT is applied:

• For B2B sales, the seller issues the invoice without applying VAT, as these transactions are exempt, according to Article 7-ter of Presidential Decree 633/1972. The customer is responsible for accounting for and declaring the VAT using the reverse charge mechanism.

• For B2C, VAT must be paid directly by the seller (EU or non-EU). To comply with this regulation, you have to register for VAT in the buyer’s country through the special One Stop Shop (OSS) regime.

Licence agreements

A licence agreement is key to defining the terms of use for digital content and protecting intellectual property rights. Without one, it’s difficult to prevent unauthorised actions such as redistribution or modification.

In Italy, the relevant legislation is Law No. 633/1941 on copyright, which sets the rules for granting rights and using digital content. A licence agreement has to align with this legislation to avoid invalid clauses.

The following must be specified among the notable clauses:

• Granted rights (exclusive or non-exclusive licence)
  
• Duration of the licence
  
• Usage limitations (e.g., prohibition of resale)
  
• Guarantees and responsibilities
  
• Geographical restrictions and procedures for violations
  

A well-structured agreement protects both seller and buyer, minimising the legal risks of selling digital products.