Data, can the economic value be established exactly?

Data, can the economic value be established exactly?


The investigation launched by the Milan Public Prosecutor's Office against Meta for an alleged tax evasion of 870 million euros, at the instigation of the European Public Prosecutor's Office, opens a new chapter in relation to the controversial issue of the monetization of personal data.

According to what was reported by Il Fatto Quotidiano, the dispute would concern the unpaid VAT in relation to the registration of users on the social platforms of the Menlo Park giant. Although users do not pay a monetary fee, nevertheless - based on the prospects of the investigators - the registration of users would involve the provision of personal data, which would then be used by Meta for purposes of a commercial nature, including profiling. The transaction would therefore have been qualified for tax purposes as an exchange of different assets.

This initiative adds a further element to an already very intricate regulatory and jurisprudential framework on data monetization, which, in the course in recent years, sees the concurrence of laws (sometimes not harmonised) and investigations by various national and European supervisory authorities concerning business models, based on user data, which are also very different from each other. In more recent times, the enforcement of the Data Protection Authorities has in fact been accompanied by the initiatives of the competent authorities in the field of consumer law and competition law.

In this context, although a more correct redistribution on the European market of the wealth generated by the platforms represents a central objective for the future of our economic system, which is increasingly data driven, the initiative of the Milan Public Prosecutor's Office raises more than one question.

From the point of view of tax law, the impression one gets is that of an initiative aimed at "bending" the current guiding principles of the system in order to subject to taxation the cases deriving from the new digital economy ( a phenomenon that is not new if one thinks of the debate of the early 2000s regarding "servers" as permanent establishments within the then nascent phenomenon of ecommerce).

From here arise a series of questions that first of all they are linked to the possibility of defining "data" as an economically significant asset that can be the subject of an exchange between the user and the platform. In fact, this seems to be the necessary prerequisite for one to speak of a taxable transaction for VAT purposes (exchange of different goods, as reported in press articles). And if the answer were to be positive, the consequences could be innumerable.

Each registration made by a user to be able to access a platform, a site, an application would potentially qualify as a "sale" of an asset with the consequent application of the concept of exchange of goods and therefore of a VAT transaction.

It seems clear to us that such an approach can only lead to approximate conclusions while, conversely, the main road would be that of a profound review (above all at the European and supranational level) of the principles that inform the tax system and the of the VAT.

Furthermore, the accusatory hypothesis appears to be difficult to reconcile with the legislation on privacy. Indeed, the Charter of Fundamental Rights of the European Union recognizes the protection of personal data among the fundamental rights of the individual. Starting from this principle, the European Data Protection Supervisor - during the legislative process that then led to the adoption of the EU directive on the supply of digital content and services (2019/770), aimed at guaranteeing consumers who provide their data personal data in order to access a digital service, the same protections reserved for consumers who pay a fee in order to access this service - he stated that personal data cannot be compared to a price or money", noting that "the notion of “data as consideration” should be avoided”.

Faced with these words that clearly exclude a commodification of personal data, the treatment of which should always be accompanied by special guarantees, it seems difficult to argue that they can then be the subject of an exchange.

Given that the legal interests protected by the various sector regulations can be very distant from each other, an effort of harmonization and coordination appears essential, aimed at preserving the rights of the person, without ignoring, however, the use for purposes of a commercial nature which in fact is carried out with such data and the underlying economic interests.

However, we must start from positions of greater clarity with regard to people and commercial operators. Even the pursuit of the most noble objectives cannot take place outside a framework of certain and coherent rules. Leapfrogging and initiatives lacking the necessary coordination can be counterproductive and act as a brake on investments in a strategic sector in which the EU aspires to assume a leadership position.

It goes without saying that, where the of the Milan Public Prosecutor's Office were to be accepted, it could have significant repercussions, not only towards the large platforms, but on the business models of a much wider range of operators. Think of what is happening in the online publishing sector with paywall cookies.