3 digital platforms appeal Italy’s VAT assessment on their barter exchange of free platform access for users’ data
It is being reported by Reuters that Meta, X and LinkedIn have appealed at tax court the VAT assessments they are facing on the free exchange of their platform access to users in exchange for their data. This speculative interpretation of the EU VAT laws and tax case has already been put in doubt in May by the EU’s VAT Committee – see below.
The Italian Revenue service is seeking €887.6 million from Meta, €12.5 million from X, and approximately €140 million from LinkedIn. These claims were issued in March, with the companies’ response deadline passing in mid-July, prompting the formal appeals.
14 May 2025 EU’s VAT Committee: No legal basis for Italy to treat personal data exchanged for free access on LinkedIn, X, and Meta as taxable barter with legal ties
On 14 May 2025, EU’s VAT Committee disagreed with Italy’s interpretation of the right to assess VAT on the ‘barter’ exchange of free use of digital social media platforms (LinkedIn, X and Meta) in exchange for their users’ personal data. Since 2023, Italy’s Guardia di Finanza has been reported as assessing millions in VAT from Meta, LinkedIn and X for them providing free use of their platforms to their users in exchange for the right to exploit their personal data. Italy, without naming the platforms, had asked in April the European Commission and VAT Committee for its non-binding view on this.
VAT Committee rejects Italy’s view that barter inherently implies such legal ties for VAT
The VAT Committee, the EU’s non-binding advisory group, at its 127th VAT meeting, the European Commission presented a working paper responding to Italy’s question on how to determine the taxable amount for barter transactions under EU VAT rules. Italy had asked if barter could be treated as inherently involving “legal ties” under Article 80 of the VAT Directive—allowing use of open market value to calculate VAT—and what criteria to use for valuing self-produced goods or intellectual services when open market or cost methods fail.
The Commission, referencing settled case-law of the Court of Justice of the EU (CJEU), clarified that legal or personal ties (such as family, ownership, or management links) under Article 80 must be assessed case by case. They rejected Italy’s view that barter inherently implies such ties, stressing that Article 80 provides an exhaustive list of situations where VAT can be levied on open market value instead of the agreed price. Thus, member states cannot expand this to all barter deals. For in-kind transactions, the taxable amount is the monetary value of the goods or services exchanged, including all costs borne by the recipient to obtain them, as the CJEU has ruled.
The Italian delegation explained the challenges they face using cost criteria, especially for self-produced goods and intellectual services, and sought to know if other countries had similar issues. In the subsequent discussion, six delegations agreed with the Commission’s position, confirming that legal ties cannot be presumed in barter deals. One country noted that in their experience, determining the taxable amount—such as for land exchanged for construction—was generally straightforward.
16 April 2025: Italy requests VAT Committee views
Italy had requested from the VAT Committee an opinion on the VAT liabilities on ‘free’ supplies to consumers in exchange for services as barter. Whilst the EU VAT Directive (Art 73 and 80) and settled case law permits VAT assessment on barter or exchange transactions for no cash consideration at open market values, the Directive does to provide guidance on how to calculate this.
This is almost certainly linked to Italian authorities ongoing cases where they have argued (see below) that user registrations with the Meta, X and LinkedIn platforms could be seen as taxable transactions as they imply the exchange of a membership account in return for a user’s personal data.
Digital platform barter arrangements may fail VAT tests
Attempts to levy VAT on such arrangements have failed in the past to meet the traditional VAT barter tests:
- Value of the transaction (and so VAT due) is readily determinable with legal certainty. It may be questionable whether ‘data’ has any taxable value – it is only the subsequent analysis by the platforms that generates any worth;
- Clear link between services granted by platform and benefit for users; and
- Jurisdiction of supply – can be resolved in which country the user data is ‘consumed’ as place of supply, and therefore which jurisdiction is due the VAT.
The EU VAT after ViDA is reviewing the VAT rules on barter transactions for the digital economy.
Italy assesses LinkedIn, Meta/Facebook and ‘X’ for VAT for ‘free’ platform in exchange for users’ personal data
27 March 2025: Italian tax authorities are reported to have included LinkedIn with X (Twitter) and Meta in a tax investigation regarding VAT liabilities for free digital platform services as part of a barter deal to gain their user data. This includes submitting to the digital platforms tax demands which are according to Reuters: €140m from LinkedIn; €888m from Meta; and €13m from X.
A first observation from the authorities was sent to X in January, with a response time of early April to respond. If no agreement is reached, it could proceed to judicial tax dispute. The Meta investigation passed its initial stage in December.
The X claim is reported to be a relatively small amount of €13 million, but does serve to add to the growing belief amongst European tax authorities that VAT is due on such barter transactions.
EU reviews digital barter rules as part of long-term reforms
The European Commission’s VAT Committee will soon likely be evaluating the VAT liabilities of Meta (Facebook) raised by the Italian authorities on the free provision of the Facebook social media platform to users in exchange for their personal data. Italy considers this a barter arrangement, and therefore subject to VAT. Italy’s tax agency requested the review by the EC given the novel technical and legislative issues.
The VAT Committee, an independent group of external indirect tax experts, will review the case. Any decision will be non-binding. There are several European Court of Justice cases which set the tests for a taxable supply in barter exchanges, and these indicate the Meta case does not meet them.
The Meta case raises complex questions on the link between VAT consideration and supplies. If there can be no demonstrable link or it is not possible for monetary value to be determined, then VAT is unlikely to be due. From the users’ perspective, they could view their data would cover the entire consideration of the use of the platform – the price and VAT due. Any liability to remit to the tax authorities the VAT amount would fall to Meta – hence this assessment.
There may also be the question of where is the consumption of user data taking place – and so does Italy have the right to tax? The place of supply is generally where the consumption takes place – so where does Meta actually use the user data?
Consideration need not be monetary for VAT purposes – no EU VAT Directive clarity
Typically, a VAT consideration for goods or services is monetary. But it may be non-monetary, for example as a barter. There is no legal definition of consideration in the EU VAT Directive. Aside from direct payments, it can be expenses (packing, transport, insurance etc). But there should be a link between the supply and the consideration because the supplier expects something in return for the supply
There are several important ECJ cases on this direct link question. One key point is the consideration must be capable of being expressed in money.
- Staatssecretaries van Financien v Cooperatieve Aardapplenbewarr-plaats ((1981) ECR 445. In this case, a trade association provided free cold storage facilities to its members who paid an annual membership fee. The court found no direct link between the storage facilities and economic costs for the association, so no VAT due.
- Apple & Pear Development Council (APDC), (ECJ (1988) STC 221; (1988)2 CMLR 394). Members of a fruit association paid annual fees for various promotion activities. The ECJ found not direct VAT consideration link and raised following points:
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- There was no relationship between the level of benefits which individual members obtained from the activities and the amount of the levy;
- The benefits of the services accrue to the whole industry, so all members of sector benefited, not just the members;
- The charges were always recoverable from each grower as a debt due to to the association regardless of whether or not a given service conferred a benefit to them. So meaning there was no real link between the payment and the activities.
Feb 2023: Reports of Italy’s Guardia di Finanza assessing €870 million VAT on users’ data offered to Meta (Facebook owner) as consideration for ‘free’ access to Facebook portal.
Italian authorities are reported to have raised a €870 million VAT assessment on Meta Platforms for 2015 to 2021 ‘barter’ arrangement between it and its users. The investigation was opened by Milan magistrates at the request of the European Public Prosecutor’s Office (EPPO). The assessment is based on users’ data captured by Facebook as being a taxable consideration for the access to social platform. Users do not have to pay for the use of Facebook platform.
