Italy's $954 million tax case against Meta escalated to the EU
After coming for Airbnb in a landmark ruling, Italy’s finance police are now targeting Meta in a case that would see the tech giant fork out even more in allegedly unpaid taxes, and it could be the beginning of a stream of eyewatering bills for the group across Europe.
A fraught tax case that ordering Meta to pay a €870 million ($954 million) fine is being escalated to the European Commission’s VAT committee, Reuters reports citing three people familiar with the matter.
Italy’s Guardia di Finanza (GdF) says the owner of Facebook, Instagram, and Whatsapp should be forced to pay a sales tax—often known as VAT—for providing its users with access to an online platform in return for the use of their personal data.
Landmark tax case
Milan prosecutors used a model to calculate that Meta owed €220 million ($242 million) of sales tax for 2021 as part of the wider six-year timeframe, Reuters reported.
The eventual ruling reached by the EU, the date of which is still unknown, would be non-binding. However, Reuters reports that a rejection of Italy’s case would likely lead to it being dropped at the national level.
A ruling in Italy’s favor, on the other hand, would see its outlines applied to the rest of the bloc, meaning the EU’s other 26 nations could hypothetically pursue Meta for previously unpaid taxes.
“The VAT Committee regularly deals with issues raised by Member States and both the outcome and the timeframe depend on the agenda,” a spokesperson for the European Commission told Fortune.
Representatives for Meta and the GdF didn’t immediately respond to Fortune’s request for comment.
The Silicon Valley group, valued at more than $900 billion, was first probed by Italy’s GdF in February after authorities scrutinized Meta’s activities between 2015 and 2021.
At the time, a representative for Meta told Bloomberg it strongly disagreed with the idea that providing users with access to online platforms should be subject to VAT.
Meta follows Airbnb
The case apes Italy’s targeting of Airbnb earlier this year amid a European push to get U.S. tech companies to fork out more tax from their operations in the continent.
Italy argued that Airbnb didn’t collect withholding charges on the €3.7 billion ($4 billion) in rental revenue it accrued in the country, and slapped the platform with a €779 million ($835 million) bill.
The group later settled with Italian authorities at a lower sum of €576 million ($634 million).
“Italy is an important market for Airbnb. This mutual agreement means we can focus on continuing our collaboration with Italian authorities on taxes, short-term rental rules and sustainable tourism for the benefit of our community,” the group said in a statement announcing the settlement.
Should the EU rule that Meta has to pay the mammoth tax sum, representing about 2% of its global revenues, it could have major ramifications for the tech sector in Europe and Meta’s competitors like Google and X.
Italy also pursued Netflix for unpaid taxes between 2015 and 2019, asking it to pay out €55.8 million ($59.1 million) after arguing the platform should be subject to charges because it relied on digital infrastructure to stream content to its users in the country. Netflix later agreed to pay the sum.
