Italy probes X over VAT tax payments — source

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Milan prosecutors are investigating X, the ex-Twitter owned by Elon Musk, for allegedly failing to pay €12.5m (sh48.2b) in value added tax in Italy, a judicial source said Wednesday.

Milan's financial police ended an investigation in April 2024 targeting the company Twitter UK for allegedly failing to declare income between 2016 and 2022 in Italy to avoid value-added tax (VAT), according to the source.

The investigation focused on income generated before billionaire Musk bought the social network in October 2022, the source said.

Rival US tech giant Meta was targeted last year by a similar investigation by Italy's financial police for the same reasons.

According to the Milan prosecutor's office, Meta owes more than €887m in VAT for income generated between 2015 and 2021, which the parent company of Facebook and Instagram categorically denies.

While signing up for X, Facebook or Instagram is theoretically free, users are required when opening an account to agree to share certain personal data and information, with their interactions on social networks rich in valuable data for the platforms.

Prosecutors argue that this exchange between parties amounts to a taxable transaction.

AFP has sought comment from X.

Meta is said to have failed to declare income of €3.99b for the period 2015-2021, corresponding to VAT of €887.6m, the prosecutor's office estimates.

Google, meanwhile, paid €326m to settle a dispute with the Italian tax authorities, the office said earlier this month.

The search engine was accused of not having paid full taxes due between 2015 and 2019.

According to the prosecutor's office, Google Ireland Limited had "failed to file the annual income declaration for income earned in Italy," particularly through "the sale of advertising space."