Meta, X, and LinkedIn have filed appeals against Italy’s value-added tax (VAT) claims totaling over €1 billion, marking the first time Italy has failed to reach a settlement agreement with tech companies in a tax dispute. 

As Reuters reports, the case hinges on Italy’s novel interpretation that free user registrations constitute taxable transactions when they involve exchanging personal data for account access.

Italy is seeking €887.6 million from Meta, €140 million from LinkedIn, and €12.5 million from X. The companies filed their appeals in mid-July after the deadline passed for responding to tax assessment notices issued in March.

According to experts consulted by Reuters, Italy’s approach could have far-reaching consequences for various industries—from airlines to supermarkets to publishers—that link free services to users’ acceptance of profiling cookies. The interpretation could eventually extend across the European Union, where VAT is a harmonized tax.

Meta stated it “strongly disagrees with the idea that providing access to online platforms to users should be subject to VAT,” while confirming it had cooperated with authorities on obligations under EU and local law. LinkedIn declined to comment, and X did not respond to requests from Reuters.

Seeking EU Advisory Opinion

Rather than proceeding immediately with a full trial, which could take approximately ten years through three levels of judgment, Italy is preparing to seek an advisory opinion from the European Commission’s VAT Committee. Italian authorities aim to submit specific questions by early November to receive comments by spring 2026.

While the committee’s assessment will be non-binding, a negative opinion could prompt Italy to halt the case and potentially drop the related criminal investigation.

Digital Regulation Tensions

This dispute occurs amid escalating regulatory tensions between the EU and U.S. tech companies. The European Commission recently fined Apple €500 million and Meta €200 million for Digital Markets Act violations, drawing criticism from the U.S. administration.

Meta is also contesting its “consent or pay” model for Facebook and Instagram, which the EU claims forces users to either accept personalized ads or pay for ad-free subscriptions—a model that could relate to the Italian VAT case’s core question about exchanging user data for services.