Italy Targets Meta, X, LinkedIn with $1.1B VAT Claim in Landmark Tax Case

Italy has issued a groundbreaking tax demand against Meta, X (formerly Twitter), and Microsoft-owned LinkedIn, seeking over €1.04 billion ($1.13 billion) in value-added tax (VAT) payments. This marks the first time a European country has classified free user access to online platforms as taxable, potentially reshaping digital business models across the EU.

Meta faces the largest claim at €887.6 million, followed by LinkedIn with around €140 million, and X with €12.5 million. The case covers tax years from 2015 to 2022, although the formal notices pertain only to 2015 and 2016 due to statute limitations.

Italian authorities argue that user signups involve an exchange—access in return for personal data—making it a taxable transaction under EU VAT law. Meta responded, saying it strongly disagrees with taxing access to platforms, while LinkedIn and X have remained mostly silent.

This pilot case could extend across the EU, where VAT is harmonized, impacting not only social media but other sectors offering free services in exchange for data, such as airlines, retailers, and publishers.

Unlike previous cases that ended in settlements—Google paid €326 million in February—this one proceeds to a potential legal battle. The companies have 60 days to appeal, with an optional 30-day extension for potential settlement talks.

Experts say the case may either head to a decade-long court process, end with a dropped claim, or push Italy to seek a broader EU consensus. If upheld, the ruling could redefine how tech companies operate in Europe, setting a precedent for taxing digital services tied to user data.

This bold move by Italy may trigger a domino effect, pressuring other EU nations to rethink taxation in the digital economy.