Should Netflix pay tax for presence of cables and servers? Italy thinks so

4 Oct 2019175 Views

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Pin on PinterestShare on RedditEmail this to someone

Image: © bernardbodo/Stock.adobe.com

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Pin on PinterestShare on RedditEmail this to someone

In recent years, Italy has launched investigations into Apple, Amazon and Facebook, resulting in settlements and back taxes. The country is now turning its focus to Netflix.

On Thursday (3 October), it was reported that Italian prosecutors have launched a tax evasion investigation into US streaming giant Netflix.

According to Reuters, a source with direct knowledge on the matter confirmed to Italian newspaper Corriere della Sera that prosecutors in Milan believe Netflix is evading tax in Italy, despite the fact that the company has no physical presence in the country.

Prosecutors argue that the digital infrastructure the company has in place to provide its services to 1.4m users in Italy could warrant a tax contribution to the state.

Reuters reported that the prosecutors believe that “cables and computer servers used by Netflix amount to a physical presence in Italy”.

The source told Corriere della Sera that the probe was triggered by checks conducted by Italy’s tax authority. According to Reuters, the source said: “No Netflix executive is under investigation because the probe is still at a preliminary stage.”

Tech tax

This is not the first time Italian authorities have launched investigations into US tech companies, with the nation collecting several billion euros in fines and tax payments from Apple, Amazon and Facebook in recent years.

In 2017, Google agreed to pay Italy a sum of €306m in back taxes. The same year, Amazon settled on the sum of €100m to settle a tax dispute with the European nation. A year later, Facebook agreed to pay the country €100m to end a fiscal fraud dispute.

A spokesperson from Netflix said the streaming company “has been working closely with Italian tax authorities”.

“We pay all the taxes due in Italy, and other countries around the world. Netflix invests millions of euros in Italian productions – helping to create jobs and support the local creative community.”

The spokesperson did not disclose how much Netflix pays in taxes in Italy. The company, which has more than 150m global subscribers, is set to report its Q3 financials later this month.

Kelly Earley is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com