Netflix Under Investigation for Alleged Tax Evasion

The streaming service is currently in scrutiny in Italy for tax evasion.

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According to an Italian news report, Netflix is currently under investigation for alleged tax evasion in Italy. In a report in Variety, prosecutors in Milan have opened a preliminary probe of the company on the basis that the computer servers and cables it uses constitute a digital infrastructure that makes their revenues taxable under Italian law, the Milan-based daily Corriere della Sera reported Thursday.

No Netflix executives are under investigation. There was no immediate comment from Netflix. Corriere della Sera said that Milan prosecutor Gaetano Ruta is working with Italy’s fiscal police to determine whether revenues from Netflix’s estimated 1.4 million Italian subscribers can be considered subject to Italian taxation, even though it operates out of the Netherlands.

Netflix has been paying VAT in France due to a bill enacted in 2015 that obligates service providers to pay sales tax based on point of consumption and payment, rather than at the point of distribution.

Italy has recently passed a media law that applies European legislation obligating foreign streaming services such as Netflix and Amazon Prime Video to invest 30% of their revenue in local productions.

Milan prosecutors have recently probed other U.S. tech giants such as Apple, Amazon, and Facebook and collected a reported €5 billion-plus in back taxes for Italian government coffers. But these companies all have physical offices in Italy.

The streaming giant is a product originating from the US and doesn't have any offices in Italy.

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