Italy has issued unprecedented tax demands to Meta, X (formerly Twitter), and LinkedIn, claiming they owe a total of €1.04 billion ($1.1 billion) in unpaid VAT—a move that could reshape tax rules for tech companies across the European Union, four sources told Reuters on Wednesday.

The claims cover 2015-2022, though the tax notices served apply only to 2015 and 2016, before those claims expire. Italy is demanding:

  • €887.6 million ($961 million) from Meta (Facebook, Instagram, and WhatsApp)
  • €12.5 million ($13.5 million) from X
  • €140 million ($151 million) from LinkedIn

A Potential EU-Wide Tax Shift

This pilot VAT case hinges on how social media platforms provide access to their services. Italian tax authorities argue that signing up for these platforms constitutes a taxable transaction, as users effectively exchange their personal data for access.

Meta strongly opposes the claim, stating, "We strongly disagree with the idea that providing access to online platforms should be subject to VAT." LinkedIn declined to comment, and X has not responded.

If upheld, this approach could extend across the 27-nation EU, impacting businesses beyond social media—from airlines to supermarkets to online publishers—that provide free services in exchange for user data.

Legal and Political Implications

Unlike past cases where Italy settled with tech giants—Google paid €326 million in February—this time, the tax agency issued a formal assessment notice, signaling a major shift toward full legal action rather than negotiation.

The companies have 60 days to appeal, with an optional one-month extension if they seek a settlement proposal. After that, three outcomes are possible:

  1. Court Battle – A legal dispute lasting up to 10 years, with risks for both sides.
  2. Tax Authority Withdrawal – Italy could drop the case due to legal or political challenges.
  3. EU Review – Italy may pause proceedings and consult the European Commission, allowing for an EU-wide decision.

This tax fight comes at a sensitive time for U.S.-EU trade relations, particularly as Italian Prime Minister Giorgia Meloni strengthens ties with Elon Musk, who is expanding Starlink in Italy.

If Italy’s case succeeds, it could force a fundamental rethink of the tech industry’s business model across Europe.