October 3, 2019
Italian officials have reportedly opened an investigation into Netflix regarding possible tax evasion operating its subscription streaming video service in the country.
Reuters, citing a source familiar with the situation, said prosecutors in Milan opened the inquiry despite the fact Netflix does not have a physical presence in the country.
Netflix Italy has about 1.4 million subscribers who access content through servers, desktop computers, TVs and mobile devices, which officials say amounts to a physical presence in the country.
Netflix bases European operations out of Amsterdam, Holland.
Italy has pursued similar investigations of Apple, Facebook and Amazon, reportedly resulting in substantial fines and tax payments.
With the proliferation of e-commerce and streaming video, local and national governments have recognized a potential fiscal windfall targeting companies operating for-profit operations within their borders without physical presence.
Dubbed the “Netflix tax,” Chicago earlier this year became the first U.S. city to collect taxes ($2 million) from media/tech companies operating services within its city limits.
Netflix, Amazon Prime Video and Spotify, among others, have filed litigation against the 9% tax Chicago officials imposed on streaming entertainment services four years ago.
States of Iowa, Maine, Wisconsin and Colorado, among others, have imposed taxes on Internet-based companies operating within their borders.
Lawmakers in Georgia had considered taxing Netflix and other streaming services to help pay for broadband infrastructure deployment in rural parts of the state.
Netflix and other streaming platforms were removed from verbiage associated with House Bill 887, after a local poll showed 65% of consumers were opposed to taxing Internet services.
Notably, Netflix in 2018 received a €57,000 ($70,385) tax rebate in the U.K. — despite generating a reported £700 million ($864 million) in revenue from 10 million subscribers in the region.