The matter is especially sensitive amid trade tensions between the EU and the administration of former U.S. President Donald Trump.
Italian Prime Minister Giorgia Meloni maintains a strong rapport with Musk, who aims to expand his Starlink communications business in Italy.
Even more so, the case is significant as it hinges on how social networks provide access to their services. Italian tax authorities contend that user registrations on X, LinkedIn, and Meta should be considered taxable transactions, as they involve exchanging a membership account for personal data.
It is also worth noting that Meta mentioned that it had cooperated “fully with the authorities on our obligations under EU and local law”. Also adding “strongly disagrees with the idea that providing access to online platforms to users should be subject to VAT.”.
The case could potentially extend across the 27-nation European Union, as VAT is a harmonized EU tax, prompting a reassessment of the tech industry’s business model.
According to experts consulted by Reuters, Italy’s approach could impact a wide range of companies, from airlines and supermarkets to publishers, that grant access to free services in exchange for users accepting profiling cookies.
Italy has also actively purchased tech companies over tax. In February, Google agreed to pay 326 million euros in a settlement agreement for tax claims relating the period between 2015 and 2019.
However, this is the first time in such cases that the settlement agreement has not been reached, and the Revenue Agency is handling a formal assessment notice.
