Meta, X, and LinkedIn challenge Italy for demanding over €1 billion in VAT

Meta, X, and LinkedIn have challenged Italy in court over its VAT demands. This VAT dispute is the latest in a series of clashes between EU authorities and major U.S. tech companies over taxation, privacy, and regulatory compliance. 

U.S. tech giants Meta, X, and LinkedIn have launched a legal battle against a tax claim from Italy. This will be the country’s first full-scale judicial tax trial involving major tech firms.

The case centers on the question of whether free user access to social media platforms constitutes a taxable exchange.

The Italian Revenue Agency is demanding €887.6M which is about $1.03B from Meta, €140M from LinkedIn, and €12.5M from X. Authorities are arguing that when users register for these platforms, they receive a membership account in return for personal data and that exchange, they believe, should be classified as a taxable transaction under Italy’s Value Added Tax (VAT) rules.

Meta, X, and LinkedIn challenge Italy

Previous tax disputes between Italy and tech companies have ended in negotiated settlements, but this is the first time such a case has escalated to a full judicial tax trial. The companies filed 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.

Businesses that provide free digital services that rely on user consent for data profiling, such as airlines, supermarkets, and media companies, could also fall under the expanded VAT scope if Italy’s approach is upheld.

The VAT issue is particularly sensitive in the context of EU-U.S. trade relations, which have seen renewed tensions under the administration of U.S. President Donald Trump.

In a statement to Reuters, Meta said it had “cooperated fully with the authorities on our obligations under EU and local law” but “strongly disagrees with the idea that providing access to online platforms to users should be subject to VAT.”

LinkedIn said it had “nothing to share at this time,” and X did not respond to requests for comment.

Italy is considering consulting the EU Commission

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.

According to sources familiar with the matter, 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. Both the Revenue Agency and Economy Ministry declined to comment on the matter, and no official confirmation has been made regarding the timeline for submitting questions to the EU Commission.

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.

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