Italian prosecutors have wrapped up their investigation into two executives of Meta’s Irish subsidiary, Meta Platforms Ireland Ltd, over alleged tax evasion totaling €887.6 million ($937.93 million), the Milan prosecutor’s office confirmed on Monday. The investigation’s conclusion marks a step before potential trial requests, unless the accused can prove their innocence.
Although the amount is modest compared to Meta’s $32 billion in annual revenue, the case could have broader implications for the tech industry, particularly regarding Meta’s handling of services like Facebook and Instagram. Meta has reiterated its commitment to meeting its tax obligations and pledged full cooperation with Italian authorities.
The investigation centers on the two executives of Meta’s Irish subsidiary, with a key issue involving the ongoing dispute between Meta and Italy’s Revenue Agency. Italian tax authorities argue that Meta’s user registration process constitutes a taxable transaction, where users exchange personal data for access to platforms like Facebook and Instagram.
Last November, the Revenue Agency sent Meta a formal “deed outline,” endorsing findings from a Guardia di Finanza investigation. Authorities allege Meta failed to declare €4 billion in income between 2015 and 2021, leading to VAT evasion of more than €887 million.
Meta now has 60 days to respond, either accepting the findings and paying the amount owed or challenging the case in court. The company has disagreed with the idea of charging VAT for platform access.
Given the unprecedented nature of the case, Italy’s Ministry of Finance has sought a technical evaluation from the European Commission regarding VAT on online services in exchange for personal data. The Commission’s response is still pending.
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