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Social media companies Meta, X and LinkedIn have appealed a VAT claim by Italy that could have wide-ranging effects on the way EU countries collect VAT on online activities, Reuters reported.
Italy has made tax claims against tech companies in the past, but this is the first time the country has failed to reach a settlement, resulting in the initiation of a judicial tax trial, the news agency said, citing unnamed sources.
The situation came about because rather than merely seeking a settlement figure, Italy is also reportedly seeking to establish changes to VAT rules for social networks.
Personal data
Italian tax authorities are reportedly arguing that free registrations on the social media platforms should be seen as taxable transactions, as they imply the provision of an account in exchange for access to a user’s personal data.
Tax officials are reportedly claiming 887.6 million euros (£769.3m) from Facebook parent Meta, 12.5m euros from X, formerly Twitter, and 140m euros from Microsoft-owned LinkedIn.
The three companies filed their appeals with a first instance tax court after a mid-July deadline for responding to a tax assessment notice, which was issued by Italy’s Revenue Agency in March, according to the report.
Italy’s interpretation of VAT rules could apply to a wide range of companies that allow users to sign up for an account in exchange for agreeing to cookies, the report said.
Meta said in a statement that it “strongly disagrees” with Italy’s assertion that providing access to online platforms should be subject to VAT.
The report said it is unclear whether a full trial, which involves three levels of judgement and takes an average of 10 years, would go ahead.
Italy is reportedly seeking an advisory opinion from the European Commission’s VAT Committee, which meets twice a year.
The country’s Economy Ministry is reportedly seeking to submit questions in time for a November meeting of the committee to receive comments in time for the following meeting in spring 2026.
VAT rules
A negative assessment could prompt Italy to halt the case and ultimately drop investigators’ criminal case, the report said.
The White House has been pressuring the EU to drop regulatory constraints on US tech companies, as it makes trade policy threats involving tariffs and other measures.
Meanwhile Meta is reportedly not planning to make further changes to the pay-or-consent model it offers in the EU to comply with competition rules, which could trigger daily fines.
The Financial Times reported last week that the European Commission has paused an investigation into whether X breached digital transparency rules, as it continues trade talks with the US.
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