Facebook's Parent Company, Meta, Faces $925 Million Tax Bill in Italy

Meta, the parent company of Facebook, could be facing a tax bill of nearly €870 million ($925 million) in Italy following an investigation by prosecutors, Reuters reports.

According to two sources with direct insight into the matter, the European Public Prosecutor's Office (EPPO) has requested that the Italian Revenue Agency and Guardia di Finanza investigate whether user registrations on Meta platforms should be taxed.

Officials Scrutinize Meta's Access to User Data

Investigators believe that Meta's offering of free membership in exchange for access to user data should be classified as an exchange of services, qualifying to be subjected to VAT sales tax.

The Italian tax authorities and revenue agency estimated that Meta should have paid €220 million ($234 million) in sales tax in Italy in 2021 and €870 million from 2015 to 2021.

With over 2 billion active users, Facebook is one of the world's largest social media platforms. With this, it adamantly collects vast information about its users, as detailed in its privacy policies.

Facebook collects user-provided content and information when registering for an account, creating or sharing content, and communicating with others. It also collects information regarding how users interact with its services, their networks and connections, payment and financial transactions, device information, and information from third-party websites and apps.

Establishing a link between free access and data transfer as a taxable transaction is the most significant aspect of the investigation. If this is determined to be the case, it could have repercussions for other multinational companies and European countries.

Italian Authorities Notified Meta of the Audit

The Italian daily Il Fatto Quotidiano was the first to report on the administrative tax audit of Meta. Meta and the EPPO have not yet commented on the investigation.

As per Reuters, the Italian authorities have informed Meta of their assessment, and a conversation is reportedly happening between the company and the tax agency. Meta could recognize the outcome of the inquiry and pay the requested amount or contest the findings and file an administrative complaint.

The Milan Prosecutor's Office has recently opened several tax investigations against multinational technology companies such as Google and Apple. Typically, the criminal investigation is closed once a payment agreement has been reached.

Big Data Companies Under Scrutiny

In 2019 the Italian government fined Facebook €7 million ($7.8 million) for its data practices, which have been the subject of numerous legal battles in recent years. The most recent tax investigation involving Meta is just one of the company's ongoing legal issues on a global scale.

The decision by the Italian government to classify free access to user data as an exchange of services could prompt other nations to adopt a similar stance.

This investigation could establish a precedent for how digital companies operating in Europe are taxed, particularly in the age of big data.

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