Meta LinkedIn X Sue Italy Over €1 Billion VAT Demand

Meta, X, and LinkedIn have initiated legal proceedings against Italy over a demand for over €1 billion in Value Added Tax (VAT). The Italian Revenue Agency is seeking €887.6 million from Meta, €140 million from LinkedIn, and €12.5 million from X. The dispute centers around whether the free access to these platforms, in exchange for user data, constitutes a taxable transaction under Italy's VAT rules. Italy argues that when users register for these platforms, they receive a membership account in return for personal data, which should be classified as a taxable exchange.

This legal battle marks the first full-scale judicial tax trial involving major tech firms in Italy. Previous tax disputes between Italy and tech companies have been resolved through negotiated settlements. However, this case has escalated to a full judicial tax trial, with the companies filing their appeals in a first-instance tax court after mid-July, following the March issuance of tax notices and the expiration of the response deadline.

The outcome of this case could have significant implications for other businesses that provide free digital services relying on user consent for data profiling, such as airlines, supermarkets, and media companies. If Italy's approach is upheld, these businesses could also fall under the expanded VAT scope.

The VAT issue is particularly sensitive in the context of EU-U.S. trade relations, which have seen renewed tensions. Meta has stated that it strongly disagrees with the idea that providing access to online platforms to users should be subject to VAT. LinkedIn and X have not provided comments on the matter.

While the court case formally proceeds, Italy is considering seeking an advisory opinion from the European Commission. This could influence whether or not the trial continues through Italy’s lengthy three-tiered judicial process, which often takes up to 10 years. The Italian Economy Ministry intends to submit questions to the EU Commission’s VAT Committee by early November. This committee, an independent advisory group that meets twice a year, will provide a non-binding opinion, likely by spring 2026. Although not legally enforceable, a negative opinion from the committee could lead Italy to drop the case and possibly end the related criminal investigation by Italian prosecutors.

This dispute is the latest in a series of clashes between EU authorities and major U.S. tech companies over taxation, privacy, and regulatory compliance. In recent times, tech companies and the EU have clashed repeatedly. On July 11, Meta stated that it would not alter its “pay-or-consent” model, despite the threat of EU fines. Meanwhile, the European Commission has reportedly paused a separate investigation into X for violating digital transparency rules, as it seeks to avoid disrupting the ongoing trade talks with the U.S.