ITR Indirect Tax Forum 2023: Meta VAT investigation could 'blow up'

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

ITR Indirect Tax Forum 2023: Meta VAT investigation could 'blow up'

Data currency 2000.jpg
Aleksandra Bal, Stripe | Credit: Laurent Louis

ITR’s Indirect Tax Forum heard that Italy’s VAT investigation into Meta has the potential to set new and expensive tax principles that would likely be adopted around the world

Company profit margins hinge on Italy’s €870 million VAT investigation against Meta, tax professionals told the ITR Indirect Tax Forum 2023 in Brussels yesterday, May 23.

It was first reported in February 2022 that Milan magistrates had launched an investigation into Meta at the request of the European Public Prosecutor’s Office, pursuing up to €870 million ($925 million) in unpaid VAT on the data obtained from its users.

The ongoing investigation is based on the assumption that consumers actually ‘pay’ for ‘free’ Meta services like Facebook with their data, and that transactions should therefore be subject to VAT.

Describing the core issue, Aleksandra Bal, indirect tax technology lead at financial technology company Stripe in the Netherlands, referenced the documentary The Social Dilemma.

“If you are not paying for the product, then you are the product.”

She later added: “They [online platforms] are not completely free – when we use them we allow the service provider to collect and exploit our data.”

Bal was joined on the panel by Johan Visser, indirect tax partner at Atlas Fiscalisten in Amsterdam.

The €870 million is based on consumer data transactions from 2015 to 2021, and if the case is successful it would set a dangerous international precedent, the panel told the forum.

The speakers were concerned that if one company can owe an amount so large in one jurisdiction, the global VAT tax bill will be huge if the same rules are applied worldwide.

Discussing the Italian Revenue Agency and its investigation, Visser said: “If they succeed in this case, it will blow up every online company”.

He shared his concern that a successful case might justify the pursuit of VAT on consumer data transactions in industries extending beyond purely online service providers like Meta.

Using discount cards in supermarkets as an example, Visser noted: “If you use that card, you get a discount and they get your data, you’re buying a discount.”

He then posed the question: would those transactions also be subject to similar VAT principles?

The outcome of the case depends on the ability of the authority to establish a direct link between the data obtained and the service provided.

“It will be really hard to substantiate that in court,” said Visser.

But if the authorities do, he said, it is likely that other European tax agencies will follow suit. “They’re in line, they have been for years.”

The panel and audience also raised concerns over the way data VAT amounts are calculated.

Whether data transactions for ‘free’ services are subject to VAT in the future, and at what price, will be partly determined by the Italian tax authority’s Meta investigation.

more across site & shared bottom lb ros

More from across our site

E-invoicing is currently characterised by dynamism, with fragmentation acting as a key catalyst for increasing interoperability, says Aida Cavalera of the International Observatory on eInvoicing
Pillar two and the US tax system ‘could work in harmony’, Scott Levine tells ITR in an exclusive interview to mark his arrival at Baker McKenzie
Peter White, who has a tax debt of A$2 million, has been banned for five years from seeking registration with Australia’s Tax Practitioners Board (TPB)
Wopke Hoekstra’s comments followed US measures aimed against ‘unfair foreign taxes’; in other news, Grant Thornton and Holland & Knight made key tax partner hires
An Administrative Review Tribunal ruling last month in Australia v Alcoa represents a 'concerning trend' for the tax authority, one expert tells ITR
A recent decision underlines that Indian courts are more willing to look beyond just legal compliance and examine whether foreign investment structures have real business substance
Following his Liberal Party’s election victory, one source expects Mark Carney to follow the international consensus on pillar two, as experts assess the new administration
A German economics professor was reportedly ‘irritated’ by how the Finnish ministry of finance used his data
Countries that care about the fair taxation of tech multinationals and equitable global distribution of wealth should back the UN’s tax framework, writes economist Abdelmalek Riad
The cuts disproportionately affected staff in certain positions, the report also found; in other news, MHA announced the €24m acquisition of Baker Tilly South East Europe
Gift this article