Italy—Where Creating A Social Media Account May Be A Taxable Event

Forbes

26-03-2025

Home of official Facebook desktop page and a blue verification checkmark are seen on February 20, ... More 2023 in L'Aquila, Italy. Meta CEO Mark Zuckerberg announced the launch of a paid subscription starting at $11.99 per month for users to authenticate their profiles on Meta platforms (Facebook, Instagram). (Photo by Lorenzo Di Cola/NurPhoto via Getty Images)
It's a tax nerd's fever dream—a value added tax case against tech giants that leans into barter theory and challenges the 'free' (as in beer) in free platforms. According to Reuters, in a recent levy, Italy has told Meta, X and Microsoft that if it walks like a transaction and quacks like a transaction, it's getting taxed like a transaction.
There is no such thing as a free lunch—or, apparently, a free Facebook account in Italy. That's the general thrust of the argument Italian tax authorities seem to be advancing in a landmark VAT case against big tech. The theory goes like this: when a user signs up for a social media platform—take, for example, Microsoft's LinkedIn—they are receiving a valuable service in exchange for their personal data. Because that exchange involves consideration, it should be subject to VAT—the same way a straight barter transaction would be treated.
Reuters reports Italy has handed Meta a bill for €900 million, with smaller claims lodged against the parent companies of X and LinkedIn. Since VAT is harmonized across the European Union, this isn't necessarily just a local issue—it is a potential template for taxing tech giants across the community.
The only issue is that the entire theory strains credulity. User data certainly has value, but this reimagining of how VAT works invites a parade of unintended consequences. If every exchange of attention, data, or indicia of consent counts as a taxable transaction, we aren't just taxing social media signups—we're levying a tax on the internet itself. Under the logic put forth by Italian revenue authorities, it is difficult to see how a cookie banner or email newsletter wouldn't similarly be taxable transactions subject to VAT.
Italy is unquestionably frustrated with digital tax avoidance—and with good reason. But this particular expansion feels less like a principled extension of the underlying policy logic behind VAT and more like an ambitious stretch to find some way to reach big tech's pockets.
On paper, the theory appears to be relatively straightforward. Under EU VAT law, a taxable transaction requires a supply of goods or services for consideration—when a user creates a social media account, they arguable are entering into exactly that kind of exchange. The user provides their personal data and the platform provides access to the service. No euros are exchanged, but consideration needn't be monetary.
Social media companies have spent years pitching the value of user data to advertisers and investors. They've built empires on the monetization of online user behavior—Italy's policy begs the question: if it's valuable enough to sell or have a valuation for investment purposes, why isn't it taxable?
That is the beginning and end of Italy's solid policy leg to stand on—from here on out it gets wobbly.
VAT isn't just a tax on value, it's a tax on consumption. It is designed to have a broad base, but it is also intended to be keyed to the economy. Turning every exchange of data into a deemed supply of services threatens to untether VAT from that policy logic.
It also raises the question: who is the consumer in this transaction? In a typical VAT system, businesses charge VAT on supplies but can reclaim input VAT on their purchases—hence it is a tax on value added. If Meta 'sells' an account to a user in exchange for their personal data, who's the taxable person and who's the consumer? Is Meta the supplier and the user the consumer? Then where's the payment of tax, since individuals can't deduct input VAT? Is the data itself the 'payment?' If so, how is it consumed?
Data isn't extinguished like electricity or coffee—it is collected, replicated, resold, and algorithmically digested for future use, in perpetuity. If this is a consumption tax, what exactly is being consumed and who is doing the consuming? Italy's theory opens the door to VAT-ifying intangible and inexhaustible things simply because they generate revenue somewhere down the line.
A crucial aspect in applying VAT to a barter exchange is determining the value of the bartered goods or services—this value is used as the basis for calculating the VAT due. The 'open market value' is typically used to establish this value. But what is the open market value of a LinkedIn account?
VAT requires a tax base—some monetary value against which to apply a tax rate. But valuing a user's personal data at the moment of account creation is impossible. One user's X account may be worthless, drawing no followers and contributing little to the platform, while another may be an advertising bonanza.
On the other side, how much is personal data worth? Is Meta prepared to assign a different value to an Italian engineer as against a high school student? In the advertising economy, data isn't bought and sold granularly like a commodity—it is aggregated, profiled, and monetized over time.
If this theory sticks, if simply offering access to a service in return for data that may be necessary to even make use of that service, is enough to trigger VAT—then there is no reason to stop at social media.
Airlines that offer free Wi-Fi in exchange for an email address? Sounds like a taxable transaction. Retail loyalty programs that trade purchase history for coupons? VAT-able. What about every shareware piece of software ever launched that offered a free tier in exchange for feedback, data, or brand visibility? Sounds like another bartered exchange.
The logic behind Italy's apparent claim here doesn't end with Meta or Microsoft—it touches nearly every business to consumer relationship built on the illusion of 'free.' In a world where digital engagement is treated like a currency, Italy's approach risks turning every moment of online interaction into a taxable event.