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The Milan prosecutor’s office announced on Monday, 9 December, that Meta Platforms Ireland Limited, which owns Facebook and Instagram, may owe €887.6 million in value-added tax (VAT) on income earned between 2015 and 2021. This was reported by AFP.
Data as a “fee for service”
Although registration on Facebook and Instagram is free of charge, users are required to agree to the transfer of their personal data and information. These “interactions” provide the platforms with access to information that Meta uses for commercial purposes.
According to the prosecutor’s office, this creates a so-called “synalagmatic relationship” in which both parties have mutual obligations. The conditions imposed on users are treated as commercial activity subject to taxation.
Meta’s accusation
Representatives of Meta Platforms Ireland Limited are suspected of “income tax evasion” to avoid paying VAT. According to the prosecutor’s office, Meta failed to declare €3.99 billion worth of income, which corresponds to €887.6 million in unpaid VAT.
Legal precedents
The prosecutor’s office stressed that this is not the first time that Italian authorities have recognised the commercial nature of Meta’s activities. The decision to do so was made:
- The Italian Competition Authority in 2018.
- Lazio Administrative Tribunal in 2020.
- State Council in 2021.
Meta’s reaction
At the time of publication, Meta has not officially commented on the situation. However, the investigation initiated by the Italian financial police may set an important precedent in the field of taxation of digital platforms and their responsibility for the use of user data.
This case could have global implications, affecting the tech giant’s business strategy and forcing other countries to monitor the tax liabilities of digital corporations more closely.
