
Exclusive-Meta, X and LinkedIn appeal unprecedented VAT claim by Italy
MILAN (Reuters) -U.S. tech giants Meta, X and LinkedIn have lodged an appeal against an unprecedented VAT claim by Italy that could influence tax policy across the 27-nation European Union, four sources with direct knowledge of the matter said on Monday.
This is the first time that Italy has failed to reach a settlement agreement after bringing tax cases against tech companies, resulting in a fully-fledged judicial tax trial being launched.
According to the sources, this came about because the case went beyond agreeing on a settlement figure and sought to establish a broader approach focused on how social networks provide access to their services.
Italian tax authorities argue that free user registrations with X, LinkedIn and Meta platforms should be seen as taxable transactions as they imply the exchange of a membership account in return for a user's personal data.
The issue is especially sensitive given wider trade tensions between the EU and the administration of U.S. President Donald Trump.
Italy is claiming 887.6 million euros ($1.03 billion) from Meta, 12.5 million euros from X and around 140 million euros from LinkedIn.
Meta, the parent company of Facebook and Instagram, Elon Musk's social network X and Microsoft's LinkedIn filed their appeals with a first instance tax court after mid-July, when the deadline for responding to a tax assessment notice issued by Italy's Revenue Agency in March passed.
According to several experts consulted by Reuters, the Italian approach could affect almost all companies, from airlines to supermarkets to publishers, who link access to free services on their sites to users' acceptance of profiling cookies.
It could also eventually be extended across the EU where VAT is a harmonised tax.
In a statement to Reuters, Meta said that it had cooperated "fully with the authorities on our obligations under EU and local law".
It added that the company "strongly disagrees with the idea that providing access to online platforms to users should be subject to VAT".
LinkedIn said it had "nothing to share at this time".
X did not respond to a request for comment from Reuters.
ROME SEEN SEEKING EU ADVISORY
It is uncertain whether a full trial of the matter, which involves three levels of judgement and takes an average of 10 years, will go ahead.
Following discussions with the three companies, Italy is preparing as a next step to seek an advisory opinion from the European Commission, the sources said.
The Italian Revenue Agency will have to prepare specific questions, which the Economy Ministry will then send to the EU Commission's VAT Committee, which meets twice a year.
Rome aims to submit its questions for the meeting scheduled to be held by early November, in order to receive the EU's comments in time for the following meeting in spring 2026.
Italy's Economy Ministry and Revenue Agency declined to comment.
The EU Commission's VAT Committee is an independent advisory group. While its assessment will be non-binding, a "No" could prompt Italy to halt the case and ultimately drop the criminal investigation by Italian prosecutors, according to the sources.
The dispute is one of several between Europeans and U.S. Big Tech.
On July 11 Reuters exclusively reported that Meta would not be tweaking its pay-or-consent model further despite the risk of EU fines.
According to a Financial Times report on July 17, the European Commission has stalled one of its investigations into Musk's platform X for breaching its digital transparency rules while it seeks to conclude trade talks with the U.S.
($1 = 0.8588 euros)
(Reporting by Emilio Parodi, editing by Giselda Vagnoni and Keith Weir, Kirsten Donovan)

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


The Star
2 hours ago
- The Star
Meta names ChatGPT co-creator as chief scientist of Superintelligence Lab
FILE PHOTO: Meta CEO Mark Zuckerberg makes a keynote speech during the Meta Connect annual event, at the company's headquarters in Menlo Park, California, U.S. September 25, 2024. REUTERS/Manuel Orbegozo/File Photo NEW YORK (Reuters) -Meta Platforms has appointed Shengjia Zhao, co-creator of ChatGPT, as chief scientist of its Superintelligence Lab, CEO Mark Zuckerberg said on Friday, as the company accelerates its push into advanced AI. "In this role, Shengjia will set the research agenda and scientific direction for our new lab working directly with me and Alex," Zuckerberg wrote in a Threads post, referring to Meta's Chief AI Officer Alexandr Wang, who Zuckerberg hired from startup Scale AI when Meta took a big stake in it. Zhao, a former research scientist at OpenAI, co-created ChatGPT, GPT-4 and several of OpenAI's mini models, including 4.1 and o3. He is among several researchers who have moved from OpenAI to Meta in recent weeks, part of a broader talent arms race as Zuckerberg aggressively hires from rivals to close the gap in advanced AI. Meta has been offering some of Silicon Valley's most lucrative pay packages and striking startup deals to attract top researchers, a strategy that follows the underwhelming performance of its Llama 4 model. Meta launched the Superintelligence Lab recently to consolidate work on its Llama models and long‑term artificial general intelligence ambitions. Zhao is a co-founder of the lab, according to the Threads post, which operates separately from FAIR, Meta's established AI research division led by deep learning pioneer Yann LeCun. Zuckerberg has said Meta aims to build 'full general intelligence' and release its work as open source — a strategy that has drawn both praise and concern within the AI community. (Reporting by Echo Wang in New YorkEditing by Rod Nickel)


Malay Mail
3 hours ago
- Malay Mail
Trump, EU's von der Leyen to meet in Scotland in last-ditch bid to avert transatlantic trade war
BRUSSELS, July 26 — EU chief Ursula von der Leyen and US President Donald Trump said yesterday they would meet in Scotland this weekend in a decisive push to resolve a months-long transatlantic trade standoff. In a drive to slash his country's trade deficits, Trump has vowed to hit dozens of countries with punitive tariff hikes if they do not hammer out a pact with Washington by August 1. The EU—which is facing an across-the-board levy of 30-per cent—has been pushing hard for a deal with Trump's administration, while also planning retaliation should talks fall short. Von der Leyen first announced the meeting, writing on X: 'Following a good call with POTUS, we have agreed to meet in Scotland on Sunday to discuss transatlantic trade relations, and how we can keep them strong.' Arriving on UK soil late Friday, Trump confirmed he would meet the head of the European Commission, which has been negotiating with Washington on behalf of the 27-nation bloc. 'I'll be meeting with the EU on Sunday, and we'll be working on a deal,' he told reporters as he touched down at Prestwick Airport near Glasgow. 'Ursula will be here—a highly respected woman. So we look forward to that,' Trump said. 'We'll see if we make a deal,' added the president—who reiterated earlier comments saying the chance of a deal was '50-50', with sticking points remaining on 'maybe 20 different things.' 'But we're meeting ... with the European Union. And that would be, actually, the biggest deal of them all, if we make it,' he said. The high-level meeting follows months of negotiations between top EU and US trade officials, and days of signals suggesting the sides were moving towards an agreement. According to multiple European diplomats, the agreement under consideration would involve a baseline 15-per cent US levy on EU goods—the same level secured by Japan this week—and potential carve-outs for critical sectors. Von der Leyen's spokesperson Paula Pinho said 'intensive negotiations' had been taking place at technical and political level in the run up to Sunday's meeting. 'Leaders will now take stock and consider the scope for a balanced outcome that provides stability and predictability for businesses and consumers on both sides of the Atlantic,' she said. In Trump's hands Hit by multiple waves of tariffs since Trump reclaimed the White House, the EU is currently subject to a 25-per cent levy on cars, 50 per cent on steel and aluminium, and an across-the-board tariff of 10 percent, which Washington threatens to hike to 30 per cent in a no-deal scenario. The EU wants to avoid sweeping tariffs inflicting further harm on the European economy—already suffering from sluggish growth—and damaging a trading relationship worth an annual 1.6 trillion euros ($1.9 trillion) in goods and services. EU member states gave the European Commission a mandate to pursue a deal to avoid hefty US tariffs, with retaliation held out as a last resort if talks fail. Seeking to keep up the pressure in the final stretch of talks, EU states on Thursday backed a package of retaliation on $109 billion (93 billion euros) of US goods including aircraft and cars—to kick in in stages from August 7 if there is no deal. Most states prefer a deal to no deal—even with undesirable levies of 15 per cent—but exemptions are key, with aircraft, steel, lumber, pharmaceutical products and agricultural goods under discussion, diplomats said. Concerning steel, diplomats say a compromise could allow a certain quota to enter the United States, with amounts beyond that taxed at 50 per cent. Since launching its tariffs campaign, Trump's administration has so far unveiled just five agreements, including with Britain, Japan and the Philippines. While EU hopes have been rising for a deal, the approaching August 1 deadline also comes with a sense of deja-vu: earlier this month, EU officials also believed they were on the cusp of a deal, before Trump hiked his tariff threat to 30-per cent. 'The final decision is in the hands of President Trump,' an EU diplomat stressed this week. — AFP


The Sun
4 hours ago
- The Sun
Economists skeptical of Trump's US beef export claims to Australia
WASHINGTON/CANBERRA/CHICAGO: President Donald Trump said the U.S. will sell 'so much' beef to Australia after Canberra relaxed import restrictions on Thursday, but economists and traders said high prices and tight supplies make major American exports unlikely. Australia said it would loosen biosecurity rules for U.S. beef. The move will not significantly increase U.S. shipments, though, because Australia is a major beef producer and exporter whose prices are much lower, analysts said. U.S. companies export small quantities of beef to Australian buyers. They import much more in the form of lean beef used to make hamburgers, particularly as U.S. production has declined because of tight cattle supplies. U.S. beef prices set records this year after ranchers slashed their herds due to drought that burned up pasturelands used for grazing. The total herd size fell to 94.2 million head as of July 1, a record low for that date, according to U.S. Department of Agriculture data on Friday. A ban on cattle imports from Mexico because of New World screwworm, a devastating livestock pest, and steep tariffs on Brazilian beef that are set to take effect on Aug. 1 could further tighten meat supplies, and require additional imports of Australian beef. 'We can't get enough beef in the U.S. right now, so we're bringing it in from Australia and Brazil,' said Dan Norcini, an independent U.S. livestock trader. 'We're not going to be selling anything significant to anyone.' Last year, Australia shipped almost 400,000 metric tons of beef worth $2.9 billion to the United States, with just 269 tons of U.S. product moving the other way. 'They have more cattle than people,' said David Anderson, an agricultural economist at Texas A&M University. 'That's why they export so much.' DIFFERENT TASTE U.S. and Australian beef also taste different. Many Australians like the grass-fed beef raised there, not marbled beef from U.S.-raised cattle that are generally fed with grain, said Jerry Klassen, chief analyst for Resilient Capital in Winnipeg. He predicted the United States will not export substantial amounts of beef to Australia in the next five years. 'We just aren't in a position to export much beef to anyone, and the reality is Australia doesn't really have much need for U.S. beef,' said Karl Setzer, partner at Consus Ag. The barriers that remain to exporting significant volumes of U.S. beef to Australia appeared to be lost on Trump this week. 'We are going to sell so much to Australia because this is undeniable and irrefutable Proof that U.S. Beef is the Safest and Best in the entire World,' Trump said in a post on Truth Social. 'The other Countries that refuse our magnificent Beef are ON NOTICE.' Trump has attempted to renegotiate trade deals with numerous countries he says have taken advantage of the United States, a characterisation many economists dispute. 'For decades, Australia imposed unjustified barriers on U.S. beef,' U.S. Trade Representative Jamieson Greer said in a statement, calling Australia's decision a 'major milestone in lowering trade barriers and securing market access for U.S. farmers and ranchers.' Australian officials say the relaxation of restrictions was not part of any trade negotiations but the result of a years-long assessment of U.S. biosecurity practices. Canberra has restricted U.S. beef imports since 2003 due to concerns about bovine spongiform encephalopathy (BSE), or mad cow disease. Since 2019, it has allowed in meat from animals born, raised and slaughtered in the U.S. but few suppliers were able to prove that their cattle had not been in Canada and Mexico. The U.S. sources some of its feeder cattle from the two neighboring countries. On Wednesday, Australia's agriculture ministry said U.S. cattle traceability and control systems had improved enough that Australia could accept beef from cattle born in Canada or Mexico and slaughtered in the United States. The decision has caused some concern in Australia, where biosecurity is seen as essential to prevent diseases and pests from ravaging the farm sector. 'We need to know if (the government) is sacrificing our high biosecurity standards just so Prime Minister Anthony Albanese can obtain a meeting with U.S. President Donald Trump,' shadow agriculture minister David Littleproud said in a statement. Australia faces a 10% across-the-board U.S. tariff, as well 50% tariffs on steel and aluminium. Trump has also threatened to impose a 200% tariff on pharmaceuticals. Asked whether the change would help achieve a trade deal, Australian Trade Minister Don Farrell said: 'I'm not too sure.' 'We haven't done this in order to entice the Americans into a trade agreement,' he said. 'We think that they should do that anyway.' - Reuters