According to two sources with direct knowledge of the situation, Facebook parent company Meta faces a prospective tax bill of around 870 million euros ($925 million) in Italy after investigators started an investigation into the company. Milan magistrates opened the research at the request of the European Public Prosecutor’s Office (EPPO), which questioned the Guardia di Finanza police as well as the Italian Revenue Agency to probe whether user registration numbers should be taxed.
“We strongly disagree with the idea of charging users for access to online platforms,” a Meta spokesperson told Reuters in an emailed statement. The company takes its tax obligations seriously, pays all required taxes in the countries where it operates, and will fully cooperate with the authorities, according to the spokesperson.
The EPPO, based in Luxembourg, stated that it would not comment on ongoing investigations or publicly confirm which cases it was working on.The Italian daily Il Fatto Quotidiano broke the news of an administrative tax audit into Meta on Wednesday.
According to the two sources, investigators believe that free membership on Meta platforms is in exchange for access to user data and thus should be classified as an exchange of services and thus subject to VAT sales tax.
According to the sources, Italy’s tax police and revenue agency calculated a model in which Meta would have had to pay around 220 million euros in sales tax in Italy in 2021. The figure for the period prior to 2015 was 870 million euros. According to one of the sources, the most important point was the establishment of a link between free access and data transfer as a taxable transaction, which could have ramifications for other multinationals and European countries. According to a third source, Meta believes there is no direct link between the data provided by users and the access granted to the platform, and that without this link, there would be no VAT due.
According to the sources, Meta was informed of the Italian authorities’ assessment, and a conversation was taking place between the company and the revenue agency. The company can either accept the findings of the investigation and pay the requested amount, or it can contest them and file an administrative dispute.
The Milan Prosecutor’s Office has opened several tax investigations against multinational tech companies such as Google and Apple in recent years. When a payment agreement is reached, the criminal investigation is usually closed.
