Meta, X, LinkedIn Contest Italy’s Landmark Digital Tax Case

Major U.S. digital platforms Meta, X, and LinkedIn have filed formal objections against a unique tax claim from Italy, a legal standoff that may influence how digital services are taxed across Europe, according to insiders familiar with the matter.

This marks the first time Italian authorities have pushed a case this far without negotiating a settlement with global tech firms, leading instead to a formal court battle in the country’s tax system.

Insiders say the case has broader implications beyond monetary penalties, as it touches on the fundamental way social media companies provide access to their services in exchange for user data.

Italian tax officials argue that free sign-ups to Meta, X, and LinkedIn platforms constitute a commercial exchange — with personal information effectively traded for digital access — and should therefore be subject to value-added tax (VAT).

The situation is considered delicate given the ongoing trade friction between the European Union and the administration of U.S. President Donald Trump.

Italian authorities are seeking a total of roughly €1.04 billion in unpaid VAT — €887.6 million from Meta, €12.5 million from X, and about €140 million from LinkedIn.

All three tech giants submitted their challenges after the July deadline for responding to the official notice passed. The notices had been issued earlier in March by Italy’s tax agency.

Tax experts say the legal strategy Italy is pursuing could have sweeping consequences across various industries — from retail to aviation and online publishing — where free access is commonly tied to users’ consent for data collection. If upheld, this approach could eventually be adopted throughout the EU, where VAT rules are unified.

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

LinkedIn responded that it had “nothing to share at this time.” X has not issued any comment.

Rome Plans EU-Level Guidance

Whether this dispute proceeds to a full trial remains unclear, especially given the lengthy process in Italy’s judicial system — often stretching over a decade and involving multiple court stages.

Authorities are now preparing to consult the European Commission for guidance. Specific legal questions will first be drawn up by Italy’s tax agency and sent through the Economy Ministry to the EU VAT Committee, which meets twice yearly.

Rome intends to submit the questions by early November, aiming to receive feedback ahead of the committee’s next session in spring 2026.

Officials from Italy’s Economy Ministry and its tax agency have declined to comment on the issue.

While the VAT Committee’s guidance is not legally binding, a negative opinion could lead Italy to reconsider the case and potentially terminate an ongoing criminal probe into the companies involved.

This case joins a growing list of tensions between European governments and large American tech firms.

One recent report also noted that an EU inquiry into platform X — regarding alleged violations of online transparency laws — has been temporarily put on hold as broader trade negotiations with the U.S. continue.