Italy challenges tech giants over VAT on user data

The dispute questions how digital services and personal data are valued under EU law.
Italy is testing whether free social media access in exchange for data should be taxed under EU VAT law.

Meta, LinkedIn and X have filed appeals against a sweeping VAT claim by Italy, marking the first time the country has failed to settle such cases with major tech firms. Italy is demanding nearly €1 billion combined over the value of user data exchanged during free account registrations.

Italian authorities argue that providing platform access in exchange for personal data constitutes a taxable service, which if upheld, could have far-reaching implications across the EU. The case marks a significant legal shift as it challenges traditional definitions of taxable transactions in the digital economy.

Meta strongly disagreed with the concept, saying it should not be liable for VAT on free platform access. While LinkedIn offered no public comment, X did not respond to media inquiries.

Italy is now preparing to refer the issue to the EU Commission’s VAT Committee for advisory input. Though the committee’s opinion will not be binding, a rejection could derail Italy’s efforts and lead to a withdrawal of the tax claims.

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