Italy takes Meta, X and LinkedIn to court over unpaid tax
Meta, X, and LinkedIn are embroiled in a major legal battle over Italy’s demand for €1 billion in VAT. The companies have officially appealed to the Italian first-instance tax court. This is the first time Italy has launched a full-scale lawsuit against major technology companies, according to Reuters.
The dispute revolves around Italy’s interpretation of VAT rules. According to the authorities, users who sign up for free access to platforms such as Facebook, Instagram, X, and LinkedIn are entering into a taxable transaction. The Italian tax agency argues that user data provided in exchange for a membership account has economic value.
If the Italian court upholds this position, it could have far-reaching consequences for companies outside the social media sector. This could include airlines, retailers, publishers, and any company that offers digital access in exchange for user data or consent.
The Italian tax authority is demanding €887.6 million from Meta, €12.5 million from X, and about €140 million from LinkedIn. These demands were issued in March, prompting the companies to formally appeal after the response deadline had passed.
Meta said it “strongly disagrees” with the VAT claim. LinkedIn declined to comment, and X did not respond to requests. Italy is also preparing to ask the European Commission’s VAT committee for an opinion on the case.
A negative opinion from the committee could lead Italy to withdraw its claim and the associated criminal investigations. However, legal experts warn that if Italy’s approach is approved, it could significantly change the way taxable transactions are defined in the digital economy across the EU.
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